<PAGE> 1
As filed with the Securities and Exchange Commission on July 26, 1994
Registration No. 33-54231
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
PRE-EFFECTIVE AMENDMENT NUMBER ONE
TO
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
--------------------
REGIONS FINANCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------------
<TABLE>
<S> <C> <C>
DELAWARE 6711 63-0589368
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
417 NORTH 20TH STREET
BIRMINGHAM, AL 35203
(205) 326-7060
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------------
VIRGINIA L. MARTIN
LEGAL OFFICER
417 NORTH 20TH STREET
BIRMINGHAM, AL 35203
(205) 326-7060
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
--------------------
COPIES TO:
<TABLE>
<S> <C> <C>
CHARLES C. PINCKNEY FRANK M. CONNER III PAUL M. HAYGOOD
LANGE, SIMPSON, ROBINSON & SOMERVILLE ALSTON & BIRD STONE, PIGMAN, WALTHER,
417 NORTH 20TH STREET, SUITE 1700 700 THIRTEENTH STREET, WITTMANN & HUTCHINSON
BIRMINGHAM, AL 35203 SUITE 350 546 CARONDELET STREET
(205) 250-5000 WASHINGTON, D.C. 20005 NEW ORLEANS, LA 70130
(202) 508-3300 (504) 581-3200
</TABLE>
--------------------
Approximate date of commencement of proposed sale of securities to the
public: As soon as practicable after this registration statement becomes
effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
--------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A),
SHALL DETERMINE.
===============================================================================
<PAGE> 2
REGIONS FINANCIAL CORPORATION
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
CAPTION OR LOCATION IN
FORM S-4 ITEM PROXY STATEMENT/PROSPECTUS
- ---------------------------------------------------------------- ------------------------------------------
<S> <C>
1. Forepart of registration statement and outside front
cover page of prospectus.............................. Outside Front Cover of Proxy
Statement/Prospectus; Facing Page of
Registration Statement; Cross-Reference
Sheet.
2. Inside front and outside back cover of prospectus..... Available Information; Documents
Incorporated by Reference; Table of
Contents.
3. Risk factors, ratio of earnings to fixed charges and
other information..................................... Summary; Comparative Market Prices and Dividends.
4. Terms of the transaction.............................. Summary; Description of the Transaction;
Effect of the Merger on Rights of
Stockholders; Description of Regions
Common Stock.
5. Pro forma financial information....................... Summary; Summary Pro Forma Financial Information.
6. Material contacts with the company being acquired..... Summary; Description of the Transaction.
7. Additional information required for re-offering by
persons and parties deemed to be underwriters......... Not applicable.
8. Interest of named experts and counsel................. Opinions.
9. Disclosure of Commission position on indemnification
for Securities Act liabilities........................ Not Applicable (See Part II, Item 20).
10. Information with respect to S-3 registrants........... Documents Incorporated by Reference;
Summary; Business of Regions; Summary Pro Forma
Financial Information.
11. Incorporation of certain information by reference..... Documents Incorporated by Reference.
12. Information with respect to S-2 or S-3 registrants.... Available Information; Documents Incorporated by Reference.
13. Incorporation of certain information by reference..... Documents Incorporated by Reference.
14. Information with respect to registrants other than S-2
or S-3 registrants.................................... Not Applicable.
15. Information with respect to S-3 companies............. Not Applicable.
16. Information with respect to S-2 or S-3 companies...... Available Information; Documents Incorporated by Reference;
Summary.
17. Information with respect to companies other than S-2
or S-3 companies...................................... Not Applicable.
18. Information if proxies, consents, or authorizations
are to be solicited................................... Documents Incorporated by Reference; Summary; The Special
Meeting; Description of the Transaction; Description of Regions
Common Stock.
19. Information if proxies, consents, or authorizations
are not to be solicited or in an exchange offer....... Not Applicable.
</TABLE>
<PAGE> 3
Dear BNR Bancshares, Inc. Stockholder:
You are cordially invited to attend the Special Meeting of
Stockholders of BNR Bancshares, Inc. ("BNR") to be held at BNR's main office,
107 East Main Street, New Roads, Louisiana 70760, on August 26, 1994, at 10:00
a.m., local time.
At this meeting, you will be asked to consider and vote on a proposal to
approve an Agreement and Plan of Merger (the "Agreement") entered into with
Regions Financial Corporation ("Regions") pursuant to which BNR will merge (the
"Merger") with and into Regions, and Bank of New Roads (the "Bank"), a
wholly-owned subsidiary of BNR, will become a wholly-owned subsidiary of
Regions and will continue serving its current market as a state-chartered
commercial bank until combined with other banking subsidiaries of Regions
operating in Louisiana. Upon consummation of the Merger, each share of BNR
common stock issued and outstanding (except for certain shares held by BNR or
Regions and shares held by stockholders who perfect their dissenters' rights of
appraisal) will be converted into that number of shares of Regions common stock
calculated by dividing $79.70 by the average of the daily closing sale prices
of Regions common stock on the Nasdaq National Market over a specified period,
subject to minimum and maximum exchange ratios of 2.214 and 3.065 shares of
Regions common stock, respectively, for each share of BNR common stock.
The enclosed Notice of Special Meeting and Proxy Statement/Prospectus
includes a description of the proposed Merger and provides specific information
concerning the Special Meeting. Please read these materials carefully and
consider thoughtfully the information set forth in them.
The Merger has been approved unanimously by your Board of Directors
and is unanimously recommended by the Board to you for approval. Each member of
the Board of Directors of BNR has agreed to vote those BNR shares over which he
has voting authority (other than in a fiduciary capacity) in favor of the
Merger. Consummation of the Merger is subject to certain conditions, including
approval of the Agreement by BNR's stockholders and approval of the Merger by
various regulatory agencies.
Stockholders of BNR who perfect their dissenters' rights of appraisal,
if available, prior to the proposed Merger and comply with applicable law will
be entitled to receive the fair value of their BNR shares in cash, as provided
by applicable law.
It is very important that your shares be represented at the Special
Meeting even if you do not plan to attend in person. Approval of the Agreement
requires the affirmative vote of at least a majority of the voting power of BNR
common stock represented at the Special Meeting. Consequently, an abstention
will have the same effect as a vote against the proposal, but a nonvote,
unlike an abstention, would reduce the number of affirmative votes required for
approval. Whether or not you plan to attend the Special Meeting, you are urged
to complete, sign, and return promptly the enclosed proxy card. If you attend
the Special Meeting, you may vote in person if you wish, even if you previously
have returned your proxy card. The proposed Merger with Regions is a
significant step for BNR, and your vote on this matter is of great importance.
On behalf of the Board of Directors, we urge you to vote for approval of the
Merger by marking the enclosed proxy card "FOR" Item One.
Sincerely,
Charles Ray Smith
Chairman of the Board
F.J. Greely, Jr.
President and Chief Executive Officer
<PAGE> 4
BNR BANCSHARES, INC.
107 EAST MAIN STREET, NEW ROADS, LOUISIANA 70760
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 26, 1994
Notice is hereby given that a Special Meeting of Stockholders (the
"Special Meeting") of BNR Bancshares, Inc. ("BNR"), a bank holding company, will
be held at BNR's main office, 107 East Main Street, New Roads, Louisiana 70760,
on August 26, 1994, at 10:00 a.m., local time, for the following purposes:
1. MERGER. To consider and vote upon the Agreement and Plan of Merger,
dated as of April 21, 1994 (the "Agreement"), by and between BNR and
Regions Financial Corporation ("Regions"), a copy of which is attached as
Appendix A to the accompanying Proxy Statement/Prospectus and incorporated
herein by this reference, and pursuant to which (i) Regions will acquire all of
the issued and outstanding common stock of BNR through the merger of BNR with
and into Regions (the "Merger"), (ii) each share of BNR common stock (except
for certain shares held by BNR or Regions and shares held by stockholders who
perfect their dissenters' rights of appraisal) will be converted into that
number of shares of Regions common stock calculated by dividing $79.70 by the
average of the daily closing sale prices of Regions common stock in the National
Market System of the National Association of Securities Dealers Automated
Quotation System (the "Nasdaq National Market") over a specified period,
subject to minimum and maximum exchange ratios of 2.214 and 3.065 shares of
Regions common stock, respectively, for each share of BNR common stock, and
(iii) each BNR stockholder will receive cash in lieu of any remaining
fractional share interest, all as described more fully in the accompanying
Proxy Statement/Prospectus.
2. OTHER BUSINESS. To transact such other business as may come
properly before the Special Meeting, including adjourning the Special Meeting to
permit, if necessary, further solicitation of proxies.
Only stockholders of record at the close of business on July 27, 1994,
are entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof.
Stockholders of BNR have a right to dissent from the Merger and obtain
payment of the fair value of their shares in cash by complying with the
applicable provisions of Louisiana law, which are attached to the accompanying
Proxy Statement/Prospectus as Appendix C. DISSENTING SHAREHOLDERS WHO COMPLY
WITH THE PROCEDURAL REQUIREMENTS OF THE BUSINESS CORPORATION LAW OF
LOUISIANA WILL BE ENTITLED TO RECEIVE PAYMENT OF THE FAIR CASH VALUE OF THEIR
SHARES IF THE MERGER IS EFFECTED UPON APPROVAL BY LESS THAN 80% OF THE
CORPORATION'S TOTAL VOTING POWER.
We urge you to sign and return the enclosed proxy as promptly as
possible, whether or not you plan to attend the Special Meeting in person. The
proxy may be revoked by the person executing the proxy by filing with the
Secretary of BNR an instrument of revocation or a duly executed proxy bearing a
later date at or before the Special Meeting.
By Order of the Board of Directors
Charles Ray Smith
Secretary
New Roads, Louisiana
July 27, 1994
<PAGE> 5
BNR BANCSHARES, INC. REGIONS FINANCIAL CORPORATION
PROXY STATEMENT PROSPECTUS
FOR SPECIAL MEETING OF STOCKHOLDERS COMMON STOCK
TO BE HELD AUGUST 26, 1994 (PAR VALUE $.625)
This Prospectus of Regions Financial Corporation, a regional bank
holding company organized under the laws of the State of Delaware ("Regions"),
relates to the shares of common stock, par value $.625 per share, of Regions
("Regions Common Stock"), which are issuable to the stockholders of BNR
Bancshares, Inc. ("BNR") upon consummation of the proposed merger (the
"Merger") described herein by which BNR will merge with and into Regions
pursuant to the terms of an Agreement and Plan of Merger, dated as of
April 21, 1994 (the "Agreement"), between Regions and BNR.
At the effective date of the Merger (the "Effective Date"), except as
described herein, (i) BNR will merge with and into Regions, and (ii) each
outstanding share of the $10.00 par value common stock of BNR ("BNR Common
Stock") will be converted into that number of shares of Regions Common Stock
calculated by dividing $79.70 by the Average Closing Price, defined in the
Agreement as the average of the daily closing sale prices of Regions Common
Stock in the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotations System (the "Nasdaq National Market") (as
reported by The Wall Street Journal or, if not reported thereby, another
authoritative source chosen by Regions) for the 20 consecutive full trading
days on which such shares are traded on the Nasdaq National Market ending at
the close of trading on the fifth trading day preceding the Effective Date,
subject to minimum and maximum exchange ratios of 2.214 and 3.065 shares of
Regions Common Stock, respectively, for each share of BNR Common Stock. A copy
of the Agreement is attached to this Proxy Statement/Prospectus as Appendix A.
As a result of the Merger, the separate existence of BNR will cease,
and Bank of New Roads, a wholly-owned subsidiary of BNR (the "Bank"), will
become a wholly-owned subsidiary of Regions and will continue in operation
serving its current markets as a state-chartered commercial bank until combined
with other banking subsidiaries of Regions operating in Louisiana. For a
further description of the terms of the Merger, see "Description of the
Transaction."
This Prospectus also constitutes a Proxy Statement of BNR and is
being furnished to the stockholders of BNR in connection with the solicitation
of proxies by the Board of Directors of BNR for use at its special meeting of
stockholders, including any adjournment or postponement thereof (the "Special
Meeting"), to be held on August 26, 1994, to consider and vote upon the
proposed Merger and related matters. This Proxy Statement/Prospectus and the
accompanying proxy card are first being mailed to stockholders of BNR on or
about July 28, 1994.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER
OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is July 27, 1994.
<PAGE> 6
AVAILABLE INFORMATION
Regions and BNR are subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, and other information
with the Securities and Exchange Commission (the "SEC"). Copies of such
reports, proxy statements, and other information can be obtained, at prescribed
rates, from the SEC by addressing written requests for such copies to the
Public Reference Section at the SEC at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. In addition, such reports, proxy statements, and other
information can be inspected at the public reference facilities referred to
above and at the regional offices of the SEC at 7 World Trade Center, 13th
Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661.
This Proxy Statement/Prospectus constitutes part of a registration
statement on Form S-4 (including any exhibits and amendments thereto, the
"Registration Statement") filed by Regions with the SEC under the Securities
Act of 1933, as amended (the "Securities Act"), relating to the securities
offered hereby. This Proxy Statement/Prospectus does not include all of the
information in the Registration Statement, certain portions of which have been
omitted pursuant to the rules and regulations of the SEC. For further
information about Regions and the securities offered hereby, reference is made
to the Registration Statement. The Registration Statement may be inspected and
copied, at prescribed rates, at the SEC's public reference facilities at the
addresses set forth above. Regions Common Stock is traded in the Nasdaq
National Market. Reports, proxy statements, and other information concerning
Regions may be inspected at the offices of the National Association of
Securities Dealers, Inc. (the "NASD"), 1735 K Street, N.W., Washington, D.C.
20006.
No person is authorized to give any information or to make any
representations other than those included in this Proxy Statement/Prospectus,
and if given or made, such information or representations must not be relied
upon as having been authorized by Regions or BNR. This Proxy
Statement/Prospectus does not constitute an offer to sell, or a solicitation of
an offer to buy, the securities offered hereby in any jurisdiction to or from
any person to or from whom it is unlawful to make such an offer or
solicitation. Neither the delivery of this Proxy Statement/Prospectus nor any
distribution of securities made hereunder shall under any circumstances create
an implication that there has been no change in the affairs of Regions or BNR
since the date hereof or that the information herein is correct as of any time
subsequent to the date hereof.
All information included or incorporated by reference in this Proxy
Statement/Prospectus with respect to Regions was supplied by Regions, and all
information included or incorporated by reference herein with respect to BNR
was supplied by BNR.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the SEC by Regions
pursuant to the Exchange Act are hereby incorporated by reference herein:
1. Regions' Annual Report on Form 10-K for the fiscal year
ended December 31, 1993;
2. Regions' Quarterly Report on Form 10-Q for the quarter
ended March 31, 1994;
3. Regions' Current Reports on Form 8-K dated as of December
31, 1993, and July 8 and 18, 1994; and
4. The description of Regions Common Stock under the heading
"Item 1. Capital Stock to be Registered" in the registration statement
on Form 8-A of Regions relating to Regions Common Stock and in any
amendment or report filed for the purpose of updating such
description.
5. Regions' reports on Form 10-C dated as of December 31,
1993, and May 2, 1994.
Regions' Annual Report on Form 10-K for the year ended December 31,
1993, incorporates by reference specific portions of Regions' Annual Report to
Stockholders for that year (the "Regions Annual Report to Stockholders"), but
does not incorporate other portions of the Regions Annual Report to
Stockholders. Only
2
<PAGE> 7
those portions of the Regions Annual Report to Stockholders captioned
"Financial Summary & Review 1993," "Financial Statements and Notes," and
"Historical Financial Summary" are incorporated herein. Other portions of the
Regions Annual Report to Stockholders are NOT incorporated herein and are not
a part of the Registration Statement.
The following documents previously filed with the SEC by BNR pursuant
to the Exchange Act are hereby incorporated by reference herein:
1. BNR's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1993, as amended;
2. BNR's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994; and
3. BNR's Current Report on Form 8-K dated as of March 16, 1994.
BNR's Annual Report on Form 10-KSB for the year ended December 31,
1993, incorporates by reference specific portions of BNR's Annual Report to
Stockholders for that year (the "BNR Annual Report to Stockholders"), but does
not incorporate other portions of the BNR Annual Report to Stockholders. Only
the audited financial statements on pages 3-15 of the BNR Annual Report to
Stockholders are incorporated herein. Other portions of the BNR Annual Report
to Stockholders are NOT incorporated herein and are not a part of the
Registration Statement.
All documents filed by Regions pursuant to Sections 13(a), 13(c), 14,
or 15(d) of the Exchange Act after the date of this Proxy Statement/Prospectus
and prior to the date of the Special Meeting shall be deemed to be incorporated
by reference in this Proxy Statement/Prospectus and to be a part hereof from
the date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes hereof to the extent that a
statement contained herein or in any subsequently filed document which also is,
or is deemed to be, incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed to constitute a part hereof, except as so modified or superseded.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THOSE DOCUMENTS ARE
AVAILABLE UPON REQUEST, WITHOUT CHARGE (EXCEPT FOR THE EXHIBITS THERETO), IF
FILED BY REGIONS, FROM RONALD C. JACKSON, STOCKHOLDER ASSISTANCE, REGIONS
FINANCIAL CORPORATION, P.O. BOX 1448, MONTGOMERY, ALABAMA 36102 (TELEPHONE
(205) 832-8450), AND IF FILED BY BNR, FROM DANIEL J. DIETRICK, TREASURER, BNR
BANCSHARES, INC., P.O. BOX 250, NEW ROADS, LOUISIANA 70760, (TELEPHONE (504)
638-3791). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY AUGUST 19, 1994.
3
<PAGE> 8
TABLE OF CONTENTS
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . .
DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . .
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special Meeting of BNR Stockholders . . . . . . . . . . . . . . . . .
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . .
The Merger; Exchange Ratio . . . . . . . . . . . . . . . . . . . . . .
Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . .
Reasons for the Merger; Recommendation of BNR's Board
of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Opinion of BNR's Financial Advisor . . . . . . . . . . . . . . . . . .
Effective Date of the Merger . . . . . . . . . . . . . . . . . . . . .
Exchange of Stock Certificates . . . . . . . . . . . . . . . . . . . .
Regulatory Approvals and Other Conditions . . . . . . . . . . . . . .
Waiver, Amendment, and Termination of the Agreement . . . . . . . . .
Interests of Certain Persons in the Merger . . . . . . . . . . . . . .
Certain Federal Income Tax Consequences of the Merger . . . . . . . .
Certain Differences in Stockholders' Rights . . . . . . . . . . . . .
Comparative Market Prices of Common Stock . . . . . . . . . . . . . .
Comparative Per Share Data . . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . .
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . .
Savings and Stock Bonus Plan . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange Ratio; Minimum and Maximum Limitations . . . . . . . . . . .
Background of and Reasons for the Merger . . . . . . . . . . . . . . .
Opinion of BNR's Financial Advisor . . . . . . . . . . . . . . . . . .
Effective Date of the Merger . . . . . . . . . . . . . . . . . . . . .
Distribution of Regions Stock Certificates and
Payment for Fractional Shares . . . . . . . . . . . . . . . . . . .
Conditions to Consummation of the Merger . . . . . . . . . . . . . . .
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . .
Waiver, Amendment, and Termination of the Agreement . . . . . . . . .
Conduct of Business Pending the Merger . . . . . . . . . . . . . . . .
Management Following the Merger . . . . . . . . . . . . . . . . . . .
Interests of Certain Persons in the Merger . . . . . . . . . . . . . .
Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . .
Certain Federal Income Tax Consequences of the Merger . . . . . . . .
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . .
Resales of Regions Common Stock . . . . . . . . . . . . . . . . . . .
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS . . . . . . . . . . . . . .
Antitakeover Provisions Generally . . . . . . . . . . . . . . . . . .
Authorized Capital Stock . . . . . . . . . . . . . . . . . . . . . . .
Amendment of Certificate or Articles of Incorporation and Bylaws . . .
Classified Board of Directors and Absence of Cumulative Voting . . . .
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . .
Limitations on Director Liability . . . . . . . . . . . . . . . . . .
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special Meetings of Stockholders . . . . . . . . . . . . . . . . . . .
Actions by Stockholders Without a Meeting . . . . . . . . . . . . . .
4
<PAGE> 9
Stockholder Nominations and Proposals . . . . . . . . . . . . . . .
Business Combinations with Certain Persons . . . . . . . . . . . . .
Mergers, Consolidations, and Sales of Assets Generally . . . . . . .
Dissenters' Rights of Appraisal . . . . . . . . . . . . . . . . . .
Stockholders' Rights to Examine Books and Records . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMPARATIVE MARKET PRICES AND DIVIDENDS . . . . . . . . . . . . . . . . .
BUSINESS OF BNR . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF BNR . . . . . . . . . . .
BUSINESS OF REGIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . .
SUMMARY PRO FORMA FINANCIAL DATA . . . . . . . . . . . . . . . . . . . .
SUPERVISION AND REGULATION . . . . . . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of Dividends . . . . . . . . . . . . . . . . . . . . . . . .
Transactions with Affiliates . . . . . . . . . . . . . . . . . . . .
Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . .
Support of Subsidiary Institutions . . . . . . . . . . . . . . . . .
Prompt Corrective Action . . . . . . . . . . . . . . . . . . . . . .
Brokered Deposits . . . . . . . . . . . . . . . . . . . . . . . . .
FDIC Insurance Assessments . . . . . . . . . . . . . . . . . . . . .
New Safety and Soundness Standards . . . . . . . . . . . . . . . . .
Depositor Preference . . . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF REGIONS COMMON STOCK . . . . . . . . . . . . . . . . . . .
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . .
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX A--Agreement and Plan of Merger . . . . . . . . . . . . . . . . A-1
APPENDIX B--Opinion of Chaffe & Associates, Inc . . . . . . . . . . . . . B-1
APPENDIX C--Copy of Section 12:131 of Louisiana Business Corporation Law. C-1
5
<PAGE> 10
SUMMARY
The following is a summary of certain information relating to the
proposed Merger and the offering of shares of Regions Common Stock to be issued
upon consummation thereof. This summary does not purport to be complete and is
qualified in its entirety by the more detailed information appearing elsewhere
or incorporated by reference in this Proxy Statement/Prospectus. Stockholders
are urged to read carefully the entire Proxy Statement/Prospectus, including
the Appendices. As used in this Proxy Statement/Prospectus, the terms "Regions"
and "BNR" refer to those entities, respectively, and where the context
requires, to those entities and their respective subsidiaries.
THE PARTIES
BNR. BNR is a bank holding company organized under the laws of the
State of Louisiana with its principal executive office located in New Roads,
Louisiana. BNR operates principally through the Bank, which is a
state-chartered commercial bank and which provides a range of retail banking
services through five offices in Pointe Coupee Parish and one office in East
Baton Rouge Parish, Louisiana. At March 31, 1994, BNR had total consolidated
assets of approximately $142.7 million, total consolidated deposits of
approximately $125.3 million, and total consolidated stockholders' equity of
approximately $15.6 million. BNR's principal executive office is located at 107
East Main Street, New Roads, Louisiana 70760, and its telephone number at such
address is (504) 638-3791.
Additional information with respect to BNR and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. Copies of such documents, consisting of BNR's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1993, as amended,
including that portion of the BNR Annual Report to Stockholders incorporated
therein, BNR's Quarterly Report on Form 10-Q for the quarter ended March 31,
1994, and BNR's Current Report on Form 8-K dated as of March 16, 1994,
accompany this Proxy Statement/Prospectus.
REGIONS. Regions, formerly known as First Alabama Bancshares, Inc.,
is a regional bank holding company headquartered in Birmingham, Alabama, which
operated as of June 1, 1994, 243 banking offices in Alabama, Florida, Georgia,
Louisiana, and Tennessee. At March 31, 1994, Regions had total consolidated
assets of approximately $10.4 billion, total consolidated deposits of
approximately $8.8 billion, and total consolidated stockholders' equity of
approximately $878 million. Regions operates five state-chartered commercial
bank subsidiaries and one federal stock savings bank in the States of Alabama,
Florida, Georgia, Louisiana, and Tennessee and four banking-related
subsidiaries engaged in mortgage banking, credit life insurance, leasing, and
securities brokerage activities with offices in various Southeastern states.
Through its subsidiaries, Regions offers a broad range of banking and
banking-related services.
During the 1994 fiscal year, Regions has completed the acquisitions of
two financial institutions in the States of Alabama and Louisiana (referred to
as the "Recently Completed Acquisitions") and has entered into definitive
agreements to acquire three financial institutions in addition to BNR in the
States of Alabama, Georgia, and Louisiana (referred to as the "Other Pending
Acquisitions"). Information with respect to the Recently Completed
Acquisitions and the Other Pending Acquisitions (referred to collectively as
the "Other Acquisitions") is included under "Business of Regions -- Recent
Developments" and "Summary Pro Forma Financial Information."
Regions was organized under the laws of the State of Delaware and
commenced operations in 1971 under the name First Alabama Bancshares, Inc. On
May 2, 1994, the name of First Alabama Bancshares, Inc. was changed to Regions
Financial Corporation. Regions is a registered bank holding company under the
Bank Holding Company Act of 1956, as amended (the "BHC Act"). Regions'
principal executive offices are located at 417 North 20th Street, Birmingham,
Alabama 35203, and its telephone number at such address is (205) 326-7100.
Additional information with respect to Regions and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. See "Available Information," "Documents Incorporated by
Reference," and "Business of Regions."
6
<PAGE> 11
SPECIAL MEETING OF BNR STOCKHOLDERS
The Special Meeting will be held at 10:00 a.m., local time, on
August 26, 1994, at BNR's main office, 107 East Main Street, New Roads,
Louisiana 70760, for the purpose of considering and voting upon approval of
the Agreement. See "The Special Meeting."
RECORD DATE; VOTE REQUIRED
Only holders of record of BNR Common Stock at the close of business on
July 27, 1994 (the "Record Date"), will be entitled to vote at the Special
Meeting. The affirmative vote of at least a majority of the voting power of
BNR Common Stock represented in person or by proxy at the Special Meeting will
be required to approve the Agreement. As of the Record Date, there were
326,218 shares of BNR Common Stock outstanding and entitled to be voted.
The directors and executive officers of BNR and their affiliates
beneficially owned, as of the Record Date, 51,116 shares (or approximately
15.67% of the outstanding shares) of BNR Common Stock. Each member of the Board
of Directors of BNR has agreed to vote those BNR shares over which he has
voting authority (other than in a fiduciary capacity) in favor of the Merger.
The directors and executive officers of Regions and their affiliates
beneficially owned, as of the Record Date, no shares of BNR Common Stock. As of
that date, neither BNR nor Regions held any shares of BNR Common Stock in a
fiduciary capacity for others. See "The Special Meeting -- Record Date; Vote
Required."
THE MERGER; EXCHANGE RATIO
The Agreement provides for the acquisition of BNR by Regions pursuant
to the Merger of BNR with and into Regions. At the Effective Date each
share of BNR Common Stock (excluding any shares held by BNR, Regions, or their
respective subsidiaries, other than shares held in a fiduciary capacity or in
satisfaction of debts previously contracted, and shares held by stockholders
who perfect their dissenters' rights of appraisal) issued and outstanding at
the Effective Date will be converted into that number of shares of Regions
Common Stock (the "Exchange Ratio"), calculated by dividing $79.70 by the
Average Closing Price (the average of the daily closing sale prices of Regions
Common Stock on the Nasdaq National Market (as reported by The Wall Street
Journal or, if not reported thereby, another authoritative source chosen by
Regions) for the 20 consecutive full trading days on which such shares are
traded on the Nasdaq National Market ending at the close of trading on the
fifth trading day preceding the Effective Date), subject to minimum and maximum
exchange ratios of 2.214 and 3.065 shares of Regions Common Stock,
respectively, for each share of BNR Common Stock. See "Description of the
Merger -- Exchange Ratio; Minimum and Maximum Limitations."
No fractional shares of Regions Common Stock will be issued. Rather,
cash will be paid in lieu of any fractional share interest to which any BNR
stockholder would be entitled upon consummation of the Merger, based on the
Average Closing Price. See "Description of the Transaction -- General."
DISSENTING STOCKHOLDERS
Holders of BNR Common Stock entitled to vote on approval of the
Agreement have the right to dissent from the Merger and, upon consummation of
the Merger and the satisfaction of certain specified procedures and conditions,
to receive cash in respect of the fair value of such holders' shares of BNR
Common Stock in accordance with the applicable provisions of Section 12:131 of
the Louisiana Business Corporation Law (the "Louisiana Act"). In the event that
the Merger is approved by 80% or more of the total voting power of BNR, then
dissenters' rights of appraisal, in accordance with the Louisiana Act, will not
be available. The procedures to be followed by dissenting stockholders are
summarized under "Description of the Transaction -- Dissenting Stockholders,"
and a copy of the applicable provisions of the Louisiana Act is set forth in
Appendix C to this Proxy Statement/Prospectus.
7
<PAGE> 12
REASONS FOR THE MERGER; RECOMMENDATION OF BNR'S BOARD OF DIRECTORS
BNR's Board of Directors has unanimously approved the Merger and the
Agreement and has determined that the Merger is in the best interests
of BNR and its stockholders. Accordingly, BNR's Board unanimously recommends
that BNR's stockholders vote FOR approval of the Agreement. In approving the
Merger, BNR's directors considered BNR's financial condition, the financial
terms and the income tax consequences of the Merger, the likelihood of the
Merger being approved by regulatory authorities without undue conditions or
delay, legal advice concerning the proposed Merger, and a report and opinion
from Chaffe and Associates, Inc. ("Chaffe") regarding the value of BNR and the
fairness of the terms of the Merger to BNR stockholders. See "Description of
the Transaction -- Background of and Reasons for the Merger." Each member of
the Board of Directors of BNR has agreed to vote such member's shares over
which he has voting authority (other than in a fiduciary capacity) in favor of
the Merger.
OPINION OF BNR'S FINANCIAL ADVISOR
Chaffe has rendered an opinion to BNR that, based upon and subject to
the procedures, matters and limitations described in its opinion and
such other matters as it considers relevant, as of the date of its opinion,
the consideration to be received in the Merger by the stockholders of BNR is
fair to the stockholders of BNR from a financial point of view. The opinion of
Chaffe is attached as Appendix B to this Proxy Statement/Prospectus. BNR
stockholders are urged to read the opinion in its entirety for a description
of the procedures followed, matters considered, and limitations on the reviews
undertaken in connection therewith. See "Description of the Transaction --
Opinion of BNR's Financial Advisor."
EFFECTIVE DATE
Subject to the conditions to the obligations of the parties to effect
the Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Louisiana Certificate of Merger are
filed and become effective with, respectively, the Delaware Secretary of State
and the Louisiana Secretary of State. Unless otherwise agreed upon by Regions
and BNR, and subject to the conditions to the obligations of the parties to
effect the Merger, the parties will use their reasonable efforts to cause the
Effective Date to occur on the first business day following the last to occur
of (i) the effective date (including the expiration of any applicable waiting
period) of the last federal or state regulatory approval required for the
Merger and (ii) the date on which the Agreement is approved by the requisite
vote of BNR stockholders; or such later date within 30 days thereof as
specified by Regions. The parties expect that all conditions to consummation of
the Merger will be satisfied so that the Merger can be consummated during the
third quarter of 1994, although there can be no assurance as to whether or when
the Merger will occur. See "Description of the Transaction -- Effective Date of
the Merger," "-- Conditions to Consummation of the Merger," and "-- Waiver,
Amendment, and Termination of the Agreement."
EXCHANGE OF STOCK CERTIFICATES
Promptly after the Effective Date, Regions will cause First Alabama
Bank, acting in its capacity as exchange agent for Regions (the "Exchange
Agent"), to mail to the former stockholders of BNR a form letter of
transmittal, together with instructions for the exchange of such stockholders'
certificates representing shares of BNR Common Stock for certificates
representing shares of Regions Common Stock. BNR STOCKHOLDERS SHOULD NOT SEND
IN THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE THE FORM LETTER OF TRANSMITTAL
AND INSTRUCTIONS. See "Description of the Transaction -- Distribution of
Regions Stock Certificates and Payment for Fractional Shares."
REGULATORY APPROVALS AND OTHER CONDITIONS
The proposed Merger is subject to approval by the Board of Governors
of the Federal Reserve System (the "Federal Reserve") and the Louisiana
Commissioner of Financial Institutions (the "Louisiana Commissioner"). An
application has been filed with each of these agencies for the requisite
approvals and each of such agencies has approved the Merger.
Consummation of the Merger is subject to various other conditions,
including receipt of the required
8
<PAGE> 13
approval of BNR stockholders, receipt of an opinion of counsel as to the
tax-free nature of certain aspects of the Merger, and certain other conditions.
See "Description of the Transaction -- Conditions to Consummation of the
Merger."
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date by mutual action of the Board of Directors of both
BNR and Regions, or by action of the Board of Directors of either company under
certain circumstances, including if the Merger is not consummated by March 31,
1995, unless the failure to consummate the Merger by such time is due to a
breach of the Agreement by the party seeking to terminate. See "Description of
the Transaction -- Waiver, Amendment, and Termination of the Agreement."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of BNR's management and Board of Directors have
interests in the Merger in addition to their interests as stockholders of BNR
generally. Those interests relate to, among other things, provisions in the
Agreement regarding indemnification and eligibility for certain Regions
employee benefits. See "Description of the Transaction -- Interests of Certain
Persons in the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Consummation of the Merger is conditioned upon the receipt of an
opinion of counsel to the effect that, among other things, the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the exchange in the
Merger of BNR Common Stock for Regions Common Stock will not give rise to gain
or loss to BNR stockholders, except to the extent of any cash received in lieu
of fractional share interests or as a result of a stockholder's perfecting such
holder's dissenter's rights of appraisal. See "Description of the Transaction
- -- Certain Federal Income Tax Consequences of the Merger."
</R.
DUE TO THE INDIVIDUAL NATURE OF THE TAX CONSEQUENCES OF THE MERGER,
BNR STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
SPECIFIC EFFECT OF THE MERGER ON THEM UNDER FEDERAL, STATE, LOCAL, AND FOREIGN
TAX LAWS.
CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS
On the Effective Date, BNR stockholders, whose rights are governed by
BNR's Articles of Incorporation and Bylaws and by the Louisiana Act,
automatically will become Regions stockholders, and their rights as Regions
stockholders will be governed by Regions' Certificate of Incorporation and
Bylaws and the Delaware General Corporation Law (the "Delaware GCL").
The rights of Regions stockholders differ from the rights of BNR
stockholders in certain important respects, some of which constitute additional
antitakeover provisions provided for in Regions' governing documents. See
"Effect of the Merger on Rights of Stockholders."
9
<PAGE> 14
COMPARATIVE MARKET PRICES OF COMMON STOCK
Regions Common Stock is traded in the over-the-counter market and
quoted on the Nasdaq National Market. BNR Common Stock is not traded in any
established market.
The following table sets forth (i) the last sale price of Regions
Common Stock and the equivalent per share price (as explained below) of BNR
Common Stock on March 16, 1994, the last trading day immediately preceding
public announcement of the proposed acquisition of BNR by Regions and July 21,
1994, the latest practicable date prior to the mailing of this Proxy
Statement/Prospectus, and (ii) the sale price in the last known transaction of
purchase and sale of BNR Common Stock, which occurred in the fourth quarter of
1993.
EQUIVALENT
PER
SHARE PRICE
REGIONS BNR OF BNR
MARKET PRICE PER SHARE AT: COMMON STOCK COMMON STOCK COMMON STOCK
- -------------------------- ------------ ------------ ------------
March 16, 1994 $32.00 $44.00 $79.70
July 21, 1994 36.25 44.00 80.26
The equivalent per share price of BNR Common Stock at each specified
date represents the last sale price of Regions Common Stock on such date
multiplied by assumed Exchange Ratios of 2.491 and 2.214, respectively (based
on the last sale price of Regions Common Stock as reported by the Nasdaq
National Market on the specified date). Stockholders are advised to obtain
current market quotations for Regions Common Stock and BNR Common Stock. No
assurance can be given as to the market price of Regions Common Stock at or
after the Effective Date.
COMPARATIVE PER SHARE DATA
The following table sets forth certain comparative per share data
relating to net income, cash dividends, and book value on (i) an historical
basis for Regions and BNR, (ii) a pro forma combined basis per share of Regions
Common Stock, giving effect to the Merger, (iii) an equivalent pro forma basis
per share of BNR Common Stock, giving effect to the Merger, (iv) a pro forma
combined basis per share of Regions Common Stock, giving effect to the Merger
and the Other Acquisitions, and (v) an equivalent pro forma basis per share of
BNR Common Stock, giving effect to the Merger and the Other Acquisitions. The
Regions and BNR pro forma combined information and the BNR pro forma Merger
equivalent information give effect to the Merger on a pooling-of-interests
accounting basis and assumes an Exchange Ratio of 2.3791 (based on the closing
sale price of Regions Common Stock as reported by the Nasdaq National Market on
June 16, 1994). See "Description of the Transaction -- Accounting Treatment."
The Regions, Merger, and Other Acquisitions pro forma combined information and
the BNR pro forma Merger and Other Acquisitions equivalent information give
effect to (i) the Merger as described in the preceding sentence and (ii) the
Other Acquisitions as described under "Summary Pro Forma Financial Information
- -- Selected Pro Forma Combined Data for Regions, BNR, and Other Acquisitions."
The pro forma data are presented for informational purposes only and are not
necessarily indicative of the results of operations or combined financial
position that would have resulted had the Merger or the Other Acquisitions
been consummated at the dates or during the periods indicated, nor are they
necessarily indicative of future results of operations or combined financial
position.
The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical financial statements of Regions
and BNR, including the respective notes thereto, and the pro forma financial
information included or incorporated by reference herein. See "Documents
Incorporated by Reference," "--Selected Financial Data," "Business of Regions
- -- Recent Developments," and "Summary Pro Forma Financial Information."
10
<PAGE> 15
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED MARCH 31, DECEMBER 31,
----------------- ------------------------------
1994 1993 1993 1992 1991
---- ---- ---- ---- ----
(Unaudited) (Unaudited except
Regions and BNR historical)
<S> <C> <C> <C> <C> <C>
NET INCOME PER COMMON SHARE
Regions historical . . . . . . . . . . . . . . . . . . . . $ 0.81 $ 0.74 $ 3.01 $ 2.60 $ 2.16
BNR historical . . . . . . . . . . . . . . . . . . . . . . 1.24 1.84 7.45 5.71 2.73
Regions and BNR pro forma combined(1) . . . . . . . . . . . 0.80 0.74 3.00 2.60 2.14
BNR pro forma Merger equivalent(2) . . . . . . . . . . . . 1.90 1.76 7.14 6.19 5.09
Regions, BNR, and Other Acquisitions
pro forma combined(3) . . . . . . . . . . . . . . . . . . 0.81 3.03 2.58 2.11
BNR pro forma Merger and Other Acquisitions
equivalent(2) . . . . . . . . . . . . . . . . . . . . . . 1.93 7.21 6.14 5.02
DIVIDENDS DECLARED PER COMMON SHARE
Regions historical . . . . . . . . . . . . . . . . . . . . $ 0.30 $ 0.26 $ 1.04 $ 0.91 $ 0.87
BNR historical . . . . . . . . . . . . . . . . . . . . . . 0.00 0.00 2.50 2.00 1.50
BNR pro forma Merger equivalent(4). . . . . . . . . . . . . 0.71 0.62 2.47 2.16 2.07
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions historical . . . . . . . . . . . . . . . . . . . . $ 21.39 $ 18.09 $20.73 $17.62 $15.76
BNR historical. . . . . . . . . . . . . . . . . . . . . . . 47.92 43.85 47.63 42.04 37.55
Regions and BNR pro forma combined (1). . . . . . . . . . . 21.36 18.10 20.72 17.62 15.76
BNR pro forma Merger equivalent(2) . . . . . . . . . . . . 50.82 43.06 49.29 41.92 37.49
Regions, BNR, and Other Acquisitions
pro forma combined(3) . . . . . . . . . . . . . . . . . . 21.15
BNR pro forma Merger and Other Acquisitions
equivalent(2) . . . . . . . . . . . . . . . . . . . . . . 50.32
</TABLE>
__________________________
(1) Represents the pro forma combined information of Regions and BNR as if
the Merger were consummated on January 1, 1991, and were accounted
for as a pooling of interests.
(2) Represents pro forma combined information multiplied by the assumed
Exchange Ratio of 2.3791 shares of Regions Common Stock for each share
of BNR Common Stock (based on the closing sale price of Regions Common
Stock as reported by the Nasdaq National Market on June 16, 1994).
(3) Represents the pro forma combined information of Regions, BNR, and
the Other Acquisitions as if the Merger were consummated at the time
and pursuant to the accounting basis described in note (1) and the
Other Acquisitions were consummated at the time and pursuant to the
accounting bases described under "Summary Pro Forma Financial
Information -- Selected Pro Forma Combined Data for Regions, BNR, and
Other Aquisitions."
(4) Represents historical dividends per share paid by Regions multiplied
by the assumed Exchange Ratio of 2.3791 shares of Regions Common Stock
for each share of BNR Common Stock (based on the closing sale price of
Regions Common Stock as reported by the Nasdaq National Market on June
16, 1994).
(5) The combined and equivalent pro forma per share data assuming minimum
and maximum Exchange Ratios, respectively, of 2.214 and 3.065 shares
of Regions Common Stock for each share of BNR Common Stock is as
follows:
<TABLE>
<CAPTION>
Exchange Ratio
------------------------------------------------------------
Minimum (2.214) Maximum (3.065)
---------------------------- --------------------------
Three Months Year Three Months Year
Ended Ended Ended Ended
March 31, 1994 December 31, 1993 March 31, 1994 December 31, 1993
-------------- ----------------- -------------- -----------------
(Unaudited)
<S> <C> <C> <C> <C>
NET INCOME PER COMMON SHARE
Regions and BNR pro forma combined . . . . . . . . . . . . . $0.80 $3.02 $0.80 $3.00
BNR pro forma Merger equivalent . . . . . . . . . . . . . . . 1.77 6.69 2.45 9.20
Regions, BNR, and Other Acquisitions
pro forma combined . . . . . . . . . . . . . . . . . . . . 0.81 3.03 0.81 3.01
BNR pro forma Merger and Other Acquisitions
equivalent. . . . . . . . . . . . . . . . . . . . . . . . . 1.79 6.71 2.48 9.23
DIVIDENDS DECLARED PER COMMON SHARE
BNR pro forma Merger equivalent . . . . . . . . . . . . . . . 0.66 2.30 0.92 3.19
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions and BNR pro forma combined . . . . . . . . . . . . . 21.39 20.74 21.25 20.61
BNR pro forma Merger equivalent . . . . . . . . . . . . . . . 47.36 45.93 65.13 63.16
Regions, BNR, and Other Acquisitions
pro forma combined . . . . . . . . . . . . . . . . . . . . 21.17 21.04
BNR pro forma Merger and Other Acquisitions
equivalent. . . . . . . . . . . . . . . . . . . . . . . . . 46.87 64.49
</TABLE>
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for Regions and BNR. The data should be read in conjunction with
the historical financial statements, related notes, and other financial
information concerning Regions and BNR incorporated by reference herein and, in
the case of BNR, accompanying this Proxy Statement/Prospectus. See
"Documents Incorporated by Reference."
11
<PAGE> 16
Selected Historical Financial Data of Regions
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED MARCH 31, DECEMBER 31,
--------------- -------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
(Unaudited)
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Total interest income . . . . . . . . . . $ 170,906 $ 135,719 $ 555,667 $ 536,747 $ 556,821 $ 519,753 $ 496,392
Total interest expense . . . . . . . . . 73,539 51,875 213,614 224,068 292,017 297,613 292,687
Net interest income . . . . . . . . . . . 97,367 83,844 342,053 312,679 264,804 222,140 203,705
Provision for loan losses . . . . . . . . 4,326 7,300 21,533 27,072 24,005 24,208 15,800
Net interest income after
loan loss provision . . . . . . . . . 93,041 76,544 320,520 285,607 240,799 197,932 187,905
Total noninterest income
excluding security gains (losses) . . 36,516 30,582 131,949 119,130 101,964 94,730 71,976
Security gains (losses) . . . . . . . . . 32 47 78 (53) (507) (982) 506
Total noninterest expense . . . . . . . . 80,145 66,091 287,026 264,659 230,340 195,611 176,707
Income tax expense . . . . . . . . . . . . 16,292 13,656 53,476 44,977 33,660 27,175 21,046
Net income . . . . . . . . . . . . . . . . $ 33,152 $ 27,426 $ 112,045 $ 95,048 $ 78,256 $ 68,894 $ 62,634
Per Share:
Net income . . . . . . . . . . . . . . . . $ 0.81 $ 0.74 $ 3.01 $ 2.60 $ 2.16 $ 1.91 $ 1.72
Cash dividends . . . . . . . . . . . . . . 0.30 0.26 1.04 0.91 0.87 0.84 0.76
Book value . . . . . . . . . . . . . . . . 21.39 18.09 20.73 17.62 15.76 14.54 13.48
Other Information:
Average number of shares outstanding . . . 41,059 37,290 37,205 36,532 36,191 36,097 36,331
Balance Sheet Data (period end):
Total assets . . . . . . . . . . . . . . . $10,436,704 $7,836,913 $10,476,348 $7,881,026 $6,745,053 $6,344,406 $5,549,612
Securities . . . . . . . . . . . . . . . . 2,478,939 1,637,036 2,368,445 1,670,170 1,575,725 1,489,200 1,133,087
Loans, net of unearned income . . . . . . 6,848,701 5,187,903 6,833,246 5,142,531 4,274,958 4,092,262 3,552,082
Total deposits . . . . . . . . . . . . . . 8,766,995 6,723,462 8,770,694 6,701,142 5,917,028 5,353,211 4,744,364
Long-term debt . . . . . . . . . . . . . . 449,665 141,718 462,862 136,990 18,782 19,707 45,343
Stockholders' equity . . . . . . . . . . . 878,239 674,923 850,965 656,655 572,971 524,132 489,441
Performance Ratios:
Return on average assets (1) . . . . . . . 1.30% 1.45% 1.40% 1.34% 1.23% 1.23% 1.20%
Return on average stockholders' equity (1) 15.55 16.71 16.14 15.64 14.27 13.64 13.25
Net interest margin (1) . . . . . . . . . 4.25 4.98 4.82 4.98 4.78 4.67 4.65
Efficiency (2) . . . . . . . . . . . . . . 58.71 56.47 59.24 59.87 60.77 59.22 60.68
Dividend payout . . . . . . . . . . . . . 37.04 35.14 34.55 35.00 40.28 43.98 44.19
Asset Quality Ratios:
Net charge-offs (recoveries) to average loans,
net of unearned income (1) . . . . . 0.10% (0.03)% 0.19% 0.28% 0.35% 0.44% 0.42%
Problem assets to net loans and
other real estate (3) . . . . . . . . 0.80 0.79 0.84 0.70 0.89 0.98 0.72
Nonperforming assets to net loans and
other real estate (4) . . . . . . . . 0.86 0.88 1.03 0.81 1.01 1.12 0.94
Allowance for loan losses to loans,
net of unearned income . . . . . . . 1.51 1.57 1.47 1.43 1.28 1.10 1.05
Allowance for loan losses to
nonperforming assets (4) . . . . . . 175.45 176.98 143.05 175.92 126.32 98.18 110.71
Liquidity and Capital Ratios:
Average stockholders' equity to
average assets . . . . . . . . . . . 8.35% 8.67% 8.70% 8.59% 8.63% 9.03% 9.06%
Average loans to average deposits . . . . 78.23 77.08 78.14 72.46 73.40 76.67 75.23
Tier 1 risk-based capital (5) . . . . . . 11.74 11.99 11.13 11.68 11.85 11.31 n/a
Total risk-based capital (5) . . . . . . . 14.12 14.75 13.48 14.44 13.19 12.51 n/a
Tier 1 leverage (5) . . . . . . . . . . . 7.99 8.30 10.11 8.44 8.40 7.65 8.36
</TABLE>
__________________________
(1) Interim period ratios are annualized.
(2) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains
(losses) from security transactions.
(3) Problem assets include loans on a nonaccrual basis, restructured
loans, and foreclosed properties.
(4) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(5) The required minimum Tier 1 and total risk-based capital ratios are
4.0% and 8.0%, respectively. The minimum leverage ratio of Tier 1
capital to total adjusted assets is 3.0% to 5.0%.
12
<PAGE> 17
Selected Historical Financial Data of BNR
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED MARCH 31, DECEMBER 31,
--------------- ------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
(Unaudited)
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Total interest income . . . . . . . . . . $ 2,393 $ 2,621 $ 10,131 $ 10,479 $ 11,245 $ 11,574 $ 11,465
Total interest expense . . . . . . . . . 804 888 3,349 3,987 5,995 6,635 6,555
Net interest income . . . . . . . . . . . 1,589 1,733 6,782 6,492 5,250 4,939 4,910
Provision for loan losses . . . . . . . . 90 40 220 140 75 150 221
Net interest income after
loan loss provision . . . . . . . . . 1,499 1,693 6,562 6,352 5,175 4,789 4,689
Total noninterest income
excluding security gains (losses) . . 265 249 961 840 1,209 655 598
Security gains (losses) . . . . . . . . . 108 30 47 193 (590) (215) 75
Total noninterest expense . . . . . . . . 1,305 1,196 4,707 4,967 4,824 4,204 4,509
Income tax expense . . . . . . . . . . . . 163 178 825 563 84 194 44
Cumulative effect of change of
accounting method . . . . . . . . . . -- -- 392 -- -- -- --
Net income . . . . . . . . . . . . . . . . $ 404 $ 598 $ 2,430 $ 1,855 $ 886 $ 831 $ 809
Per Share:
Net income . . . . . . . . . . . . . . . . $ 1.24 $ 1.84 $ 7.45 $ 5.71 $ 2.73 $ 2.56 $ 2.49
Cash dividends . . . . . . . . . . . . . . 0.00 0.00 2.50 2.00 1.50 1.50 1.50
Book value . . . . . . . . . . . . . . . . 47.92 43.85 47.63 42.04 37.55 35.63 35.01
Other Information:
Average number of shares outstanding . . . 326 326 326 325 325 325 325
Balance Sheet Data (period end):
Total assets . . . . . . . . . . . . . . . $142,687 $140,426 $136,718 $136,436 $133,323 $131,186 $119,781
Securities held to maturity . . . . . . . 25,884 61,682 21,980 60,169 58,430 58,310 49,940
Securities available for sale . . . . . . 38,480 -- 34,873 -- -- -- --
Loans, net of unearned income . . . . . . 64,104 64,437 64,742 63,248 58,787 52,873 54,722
Total deposits . . . . . . . . . . . . . . 125,321 124,152 119,342 120,397 119,646 118,270 107,504
Long-term debt . . . . . . . . . . . . . . 0 0 0 0 0 0 0
Stockholders' equity . . . . . . . . . . . 15,632 14,305 15,538 13,651 12,193 11,570 11,361
Performance Ratios:
Return on average assets (1) . . . . . . . 1.16% 1.72% 1.75% 1.40% 0.67% 0.66% 0.68%
Return on average stockholders' equity (1) 10.30 16.94 16.48 15.11 7.45 7.25 7.25
Net interest margin (1) . . . . . . . . . 4.91 5.38 5.30 5.35 4.46 4.53 4.68
Efficiency (2) . . . . . . . . . . . . . . 69.99 60.05 60.53 67.42 73.24 72.05 77.58
Dividend payout . . . . . . . . . . . . . 0.00 0.00 33.57 35.01 54.99 58.59 60.13
Asset Quality Ratios:
Net charge-offs to average loans,
net of unearned income (1) . . . . . 0.08% 0.04% 0.14% 0.18% 0.22% 0.34% 0.92%
Problem assets to net loans and
other real estate (3) . . . . . . . . 2.28 2.31 2.37 2.38 3.75 5.49 7.50
Nonperforming assets to net loans and
other real estate (4) . . . . . . . . 2.29 2.41 2.43 2.42 3.79 5.62 7.54
Allowance for loan losses to loans,
net of unearned income . . . . . . . 1.36 1.12 1.29 1.12 1.15 1.38 1.39
Allowance for loan losses to
nonperforming assets (4) . . . . . . 59.36 46.19 52.95 45.74 30.01 23.78 17.94
Liquidity and Capital Ratios:
Average stockholders' equity to
average assets . . . . . . . . . . . 11.05% 10.03% 10.61% 9.98% 9.21% 9.35% 9.57%
Average loans to average deposits . . . . 51.51 51.68 54.47 53.24 47.91 48.53 51.18
Tier 1 risk-based capital (5) . . . . . . 22.42 21.39 22.23 19.09 17.42 17.17 N/A
Total risk-based capital (5) . . . . . . . 23.67 20.36 23.44 20.08 18.39 18.25 N/A
Tier 1 leverage (5) . . . . . . . . . . . 10.92 10.11 11.19 10.34 9.13 8.80 9.45
</TABLE>
__________________________
(1) Interim period ratios are annualized.
(2) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains
(losses) from security transactions.
(3) Problem assets include loans on a nonaccrual basis, restructured
loans, and foreclosed properties.
(4) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(5) The required minimum Tier 1 and total risk-based capital ratios are
4.0% and 8.0%, respectively. The minimum leverage ratio of Tier 1
capital to total adjusted assets is 3.0% to 5.0%.
13
<PAGE> 18
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of
BNR Common Stock in connection with the solicitation by the BNR Board of
Directors of proxies for use at the Special Meeting, at which BNR stockholders
will be asked to vote upon a proposal to approve the Agreement. The Special
Meeting will be held at 10:00 a.m., local time, on August 26, 1994, at the main
offices of BNR, located at 107 East Main Street, New Roads, Louisiana 70760.
BNR stockholders are requested promptly to sign, date, and return the
accompanying proxy card to BNR in the enclosed postage-paid, addressed
envelope. A stockholder's failure to return a properly executed proxy card or
attend the Special Meeting will result in such holder's shares of BNR Common
Stock not counting toward a quorum for the Special Meeting.
Any BNR stockholder who has delivered a proxy may revoke it at any
time before it is voted by giving notice of revocation in writing or
submitting to BNR a signed proxy card bearing a later date, provided that such
notice or proxy card is actually received by BNR at or before the Special
Meeting. Any notice of revocation should be sent to BNR Bancshares, Inc., 107
East Main Street, New Roads, Louisiana 70760, Attention: Charles Ray Smith,
Corporate Secretary. A proxy will not be revoked by death or supervening
incapacity of the stockholder executing the proxy unless, before the vote,
notice of such death or incapacity is filed with the Corporate Secretary. The
shares of BNR Common Stock represented by properly executed proxies received
at or prior to the Special Meeting and not subsequently revoked will be voted
as directed in such proxies. IF INSTRUCTIONS ARE NOT GIVEN, SHARES OF BNR
COMMON STOCK REPRESENTED BY PROXIES RECEIVED WILL BE VOTED FOR APPROVAL OF THE
AGREEMENT AND IN THE DISCRETION OF THE PROXY HOLDER AS TO ANY OTHER MATTERS
THAT PROPERLY MAY COME BEFORE THE SPECIAL MEETING. IF NECESSARY, AND UNLESS
CONTRARY INSTRUCTIONS ARE GIVEN, THE PROXY HOLDER ALSO MAY VOTE IN FAVOR OF A
PROPOSAL TO ADJOURN THE SPECIAL MEETING TO PERMIT FURTHER SOLICITATION OF
PROXIES IN ORDER TO OBTAIN SUFFICIENT VOTES TO APPROVE THE AGREEMENT. As of the
date of this Proxy Statement/Prospectus, BNR is aware of no other matter to
be presented at the Special Meeting.
Solicitation of proxies will be made by mail and also may be made by
telephone or telegram or in person by the directors, officers, and employees of
BNR, who will receive no additional compensation for such solicitation but may
be reimbursed for out-of-pocket expenses. Brokerage houses, nominees,
fiduciaries, and other custodians will be requested to forward solicitation
materials to beneficial owners and will be reimbursed for their reasonable
out-of-pocket expenses.
BNR stockholders should not forward any stock certificates with their
proxy cards.
SAVINGS AND STOCK BONUS PLAN
Each employee of the Bank who is a participant in the Bank's Savings
and Stock Bonus Plan (the "ESOP") may direct the trustee of the ESOP (the
"Trustee") as to the manner in which shares of BNR Common Stock allocated to
such participant's account under the ESOP (the "Plan Shares") shall be voted by
the Trustee at the Special Meeting on the proposal to approve the Agreement.
Each ESOP participant has received with this Proxy Statement/Prospectus a
letter from the Trustee providing instructions as to the voting of such
participant's Plan Shares and a Voting Instruction Card to be used by the
participant to give voting directions to the Trustee. In order to direct the
Trustee with respect to the voting of Plan Shares, an ESOP participant must
complete, sign, and date the Voting Instruction Card and return it to the
Trustee in the envelope provided so that it is received by the Trustee before
the Special Meeting. The Trustee will tabulate the instructions received prior
to the Special Meeting and will determine the aggregate votes for and against
approval of the Agreement. At the Special Meeting, the Trustee will vote the
shares of BNR Common Stock held by it on the record date for which it has
received instructions in the manner so determined. The Trustee will not vote
any Plan Shares on the proposal to approve the Agreement to the extent it does
not receive instructions with respect thereto. Approximately 2,470 shares of
BNR Common Stock are held by the Trustee pursuant to the ESOP on behalf of the
participants of such plan.
RECORD DATE; VOTE REQUIRED
BNR's Board of Directors has established the close of business on
July 27, 1994, as the Record Date for determining the BNR stockholders entitled
to notice of and to vote at the Special Meeting. Only BNR stockholders of record
as of the Record Date will be entitled to vote at the Special Meeting. The
affirmative vote of the holders of a majority of the voting power of BNR Common
Stock represented in person or by proxy at the Special Meeting is required in
order to approve the Agreement. Therefore, returning an executed proxy card
marked as an abstention will have the same effect as a vote against the
Agreement, as will a broker's submitting a proxy card without exercising
discretionary voting authority with respect to the Agreement. Nonvotes in the
form of failing to return a properly executed proxy card, unlike explicit
abstentions, will have the effect of reducing the number of affirmative votes
required for approval of the Agreement, but will not be counted toward a
quorum at the Special Meeting. As of the Record Date, there were 326,218 shares
of BNR Common Stock outstanding and entitled to vote at the Special Meeting,
with each share entitled to one vote. For
14
<PAGE> 19
information as to persons known by BNR to beneficially own more than 5.0% of
the outstanding shares of BNR Common Stock as of the Record Date, see "Voting
Securities and Principal Stockholders of BNR."
The presence, in person or by proxy, of a majority of the outstanding
shares of BNR Common Stock is necessary to constitute a quorum of the
stockholders in order to take action at the Special Meeting. For these
purposes, shares of BNR Common Stock that are represented in person, or
represented by proxy, at the Special Meeting will be counted for quorum
purposes regardless of whether the holder of the shares or proxy fails to vote
on the Agreement or whether a broker with discretionary authority fails to
exercise its discretionary voting authority with respect to the Agreement. As
discussed above, once a quorum is established, approval of the Agreement
requires the affirmative vote of the holders of a majority of the voting power
of BNR Common Stock represented at the Special Meeting.
The directors and executive officers of BNR and their affiliates
beneficially owned, as of the Record Date, 51,116 shares (or approximately
15.67% of the outstanding shares) of BNR Common Stock. Each member of the Board
of Directors of BNR has agreed to vote the BNR shares over which he has
voting authority (other than in a fiduciary capacity) in favor of the Merger.
The directors and executive officers of Regions and their affiliates
beneficially owned, as of the Record Date, no shares of BNR Common Stock. As of
that date, no subsidiary of either BNR or Regions held any shares of BNR Common
Stock in a fiduciary capacity for others.
15
<PAGE> 20
DESCRIPTION OF THE TRANSACTION
The following material describes certain aspects of the proposed
Merger. This description does not purport to be complete and is qualified in
its entirety by reference to the Appendices hereto, including the Agreement,
which is attached as Appendix A to this Proxy Statement/Prospectus and
incorporated herein by reference. All stockholders are urged to read the
Appendices in their entirety.
GENERAL
Upon consummation of the Merger, BNR will merge with and into Regions,
the separate existence of BNR will cease, and the Bank, a wholly-owned
subsidiary of BNR, will become a wholly-owned subsidiary of Regions and will
continue in operation serving its current markets as a state-chartered
commercial bank until combined with other banking subsidiaries of Regions
operating in Louisiana. BNR Common Stock will be converted into Regions Common
Stock as described below under "-- Exchange Ratio; Minimum and Maximum
Limitations." Each share of Regions Common Stock outstanding immediately prior
to the Effective Date will remain outstanding and unchanged as a result of the
Merger.
No fractional shares of Regions Common Stock will be issued in
connection with the Merger. In lieu of issuing fractional shares, Regions will
make a cash payment equal to the fractional interest which a BNR stockholder
otherwise would receive multiplied by the Average Closing Price.
EXCHANGE RATIO; MINIMUM AND MAXIMUM LIMITATIONS
Each share of BNR Common Stock (excluding any shares held by BNR,
Regions, or their respective subsidiaries, other than shares held in a
fiduciary capacity or in satisfaction of debts previously contracted, and
shares held by stockholders who perfect their dissenters' rights of appraisal)
issued and outstanding at the Effective Date will be converted into that number
of shares of Regions Common Stock, subject to minimum and maximum limitations,
calculated by dividing $79.70 by the Average Closing Price. The Agreement
defines "Average Closing Price" as the average of the daily closing sale prices
of Regions Common Stock (as reported in The Wall Street Journal or, if not
reported thereby, another authoritative source chosen by Regions) for the 20
consecutive full trading days on which such shares are traded on the Nasdaq
National Market ending on the fifth trading day preceding the Effective Date.
If the Average Closing Price is less than $26.00, the Exchange Ratio will be
3.065, and if the Average Closing Price is greater than $36.00, the Exchange
Ratio will be 2.214.
The operation of the Exchange Ratio is illustrated by the following
table, which shows the effect that various Average Closing Prices would have on
the Exchange Ratio and on the number of shares of Regions Common Stock that
would be issuable in the Merger.
Average Closing Number of Shares
Price of Regions Exchange of Regions Common Stock
Common Stock Ratio Issuable
-------------------- ------------- ------------------------
$26.00 3.065 999,858
27.00 2.9519 962,963
28.00 2.8464 928,547
29.00 2.7483 896,545
30.00 2.6567 866,663
31.00 2.571 838,706
32.00 2.4906 812,479
33.00 2.4152 787,882
34.00 2.3441 764,688
35.00 2.2771 742,831
36.00 2.214 722,247
16
<PAGE> 21
This table is presented for illustration purposes only, and no
inference is intended or may be drawn concerning the actual Average Closing
Price which may occur or the resulting Exchange Ratio. Moreover, BNR
stockholders should be aware that the actual market value of a share of Regions
Common Stock at the Effective Date and at the time certificates for those
shares are delivered following surrender and exchange of certificates for
shares of BNR Common Stock may be more or less than the Average Closing Price.
BNR stockholders are urged to obtain information on the trading price of
Regions Common Stock that is more recent than that provided in this Proxy
Statement/Prospectus. See "Comparative Market Prices and Dividends."
No fractional shares of Regions Common Stock will be issued. Rather,
cash will be paid in lieu of any fractional share interest to which any BNR
stockholder would be entitled upon consummation of the Merger, based on the
Average Closing Price. See "Description of the Transaction -- General."
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER. In the latter half of 1992, BNR received an
expression of interest from another bank holding company (the "Interested
Party") concerning a possible acquisition of BNR. The Board of BNR met a
number of times during 1992, 1993, and early 1994 to consider that expression
of interest, as well as to review possible strategies for increasing
stockholder value, enhancing the liquidity of BNR Common Stock, and related
matters. Beginning in 1993, Chaffe provided financial advice to the Board of
BNR in connection with this review. During the course of the BNR Board's
review, in response to a request from BNR for indications of interest, BNR
provided financial and other information to certain large financial
institutions (including the Interested Party) from which BNR had received
indications of interest. At a meeting held on January 26, 1994, the BNR Board
considered various options available to BNR, including remaining an independent
bank holding company and negotiating a merger of BNR with a larger financial
institution, along with financial and investment banking advice and analyses
performed by Chaffe with respect thereto. At that meeting, the BNR Board
authorized further discussions with respect to the possible merger of BNR with
a larger financial institution.
In February 1994, Regions commenced discussions with BNR, and in
connection with those discussions, Regions received from BNR certain financial
and other information concerning BNR and the Bank. On March 16, 1994, the BNR
Board met to consider merger proposals that BNR had received from Regions, the
Interested Party, and another financial institution. Chaffe reviewed with the
BNR Board the status of negotiations with respect to the proposed merger of BNR
with a larger financial institution, the proposals that had been received from
various of those institutions, and Chaffe's analyses and recommendations with
respect to those proposals. Based on the Chaffe analyses and recommendation
and consideration of various other factors, the BNR Board approved entering
into a letter of intent and memorandum of understanding with Regions with
respect to the possible merger of BNR with and into Regions. From March 17,
1994, until April 19, 1994, BNR and Regions negotiated the provisions of the
Agreement. At a meeting of the Board of BNR held on April 20, 1994, the BNR
Board, after receiving the opinion of Chaffe (discussed below), approved
entering into the Agreement with Regions.
BNR'S REASONS FOR THE MERGER. In approving the Merger, the directors
of BNR considered a number of factors. Without assigning any relative or
specific weights to the factors, the BNR Board of Directors considered the
following material factors:
(a) the information presented to the directors by the management of
BNR concerning the business, operations, earnings, asset quality, and financial
condition of BNR, including compliance with regulatory capital requirements on
an historical and prospective basis;
(b) the financial terms of the Merger, including the relationship of
the value of the Regions Common Stock issuable in the Merger to the market
value, tangible book value, and earnings per share of BNR Common Stock, the
partial protection against a decline in the market value of Regions Common
Stock, and the partial participation in any appreciation in value of Regions
Common Stock;
(c) the nonfinancial terms of the Merger, including the treatment of
the Merger as a tax-free exchange of BNR Common Stock for Regions Common Stock
for federal and state income tax purposes;
(d) the likelihood of the Merger being approved by applicable
regulatory authorities without undue conditions or delay;
(e) the report of BNR's financial advisor reviewing a comparison of
BNR to selected peer banks, premiums paid in other merger transactions, a
mark-to-market analysis of BNR, and a discounted cash-flow analysis of BNR; and
(f) the opinion rendered by BNR's financial advisor to the effect
that, from a financial point of view,
17
<PAGE> 22
the exchange of BNR Common Stock for Regions Common Stock on the terms and
conditions set forth in the Agreement is fair to the holders of BNR Common
Stock.
The terms of the Merger were the result of arms-length negotiations
between representatives of BNR and representatives of Regions. Based upon the
consideration of the foregoing factors, the Board of Directors of BNR
unanimously approved the Merger as being in the best interests of BNR and its
stockholders. Each member of the Board of Directors of BNR has agreed to vote
such member's shares in favor of the Merger.
BNR'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT BNR STOCKHOLDERS
VOTE FOR APPROVAL OF THE AGREEMENT.
REGIONS' REASONS FOR THE MERGER. The Regions Board of Directors has
approved the Agreement and determined that the Merger is in the best interests
of Regions and its stockholders. In approving the Agreement, the Regions Board
considered a number of factors. Without assigning any relative or specific
weights to the factors, the Regions Board of Directors considered the following
material factors:
(a) a review, based in part on a presentation by Regions management,
of (i) the business, operations, earnings, and financial condition, including
the capital levels and asset quality, of BNR on an historical, prospective, and
pro forma basis and in comparison to other financial institutions in the area,
(ii) the demographic, economic, and financial characteristics of the markets in
which BNR operates, including existing competition, history of the market areas
with respect to financial institutions, and average demand for credit, on an
historical and prospective basis, and (iii) the results of Regions' due
diligence review of BNR; and
(b) a variety of factors affecting and relating to the overall
strategic focus of Regions, including Regions' desire to expand into markets in
the general vicinity of its core markets.
OPINION OF BNR'S FINANCIAL ADVISOR
GENERAL. Pursuant to an engagement letter dated as of July 6, 1993,
(the "Engagement Letter"), BNR retained Chaffe to act as its financial
advisor. Acting pursuant to the Engagement Letter, Chaffe, at the request of
the Board of Directors of BNR, acted as BNR's financial advisor in connection
with the Merger, including providing certain analyses of the financial terms of
the Merger. Chaffe is a recognized investment banking firm and is experienced
in the securities industry, in investment analysis and appraisal, and in
related corporate finance and investment banking activities, including mergers
and acquisitions, corporate recapitalizations, and valuations for estate,
corporate, and other purposes. It frequently is retained to perform similar
services for other banks and bank holding companies. BNR selected Chaffe as
its financial advisor on the basis of its experience and expertise in
transactions similar to the Merger and its reputation in the banking and
investment communities.
SCOPE OF ENGAGEMENT. In connection with its engagement to act as BNR's
financial advisor with respect to the Merger, BNR instructed Chaffe to evaluate
the fairness to the BNR stockholders, from a financial point of view, of the
consideration to be paid pursuant to the provisions of the Agreement for the
shares of BNR Common Stock in the Merger and to conduct such investigations as
Chaffe deemed appropriate for such purposes. BNR did not place any limitations
on the scope or manner of Chaffe's investigation and review. The consideration
to be received by BNR's stockholders in the Merger was determined by BNR and
Regions in their negotiations.
Chaffe delivered an oral opinion to the BNR Board on April 20, 1994,
subsequently confirmed by written opinion of that date, and a written opinion
dated the date of this Proxy Statement/Prospectus (the "Proxy Statement
Opinion"), in each case to the effect that, based upon the procedures described
in its opinions and such other matters as Chaffe considered relevant, as of the
date of such opinions, the consideration to be received by BNR's stockholders
in the Merger for their shares of BNR Common Stock was fair to the BNR
stockholders from a financial point of view. The full text of Chaffe's written
opinion as of the date hereof (which is substantially identical to the opinion
dated April 20, 1994) is attached hereto as Appendix B and is incorporated
herein by reference. The description of the opinion set forth herein is
qualified in its entirety by reference to Appendix B. BNR stockholders are
urged to read the opinion in its entirety for a description of the procedures
followed, assumptions made, matters considered, and limitations on the review
undertaken by Chaffe. Chaffe's opinion is directed to the BNR Board only,
relates only to the consideration to be received by BNR's stockholders in the
Merger for their shares of BNR Common Stock, and does not constitute a
recommendation to any BNR stockholder as to how such stockholder should vote at
the Special Meeting.
18
<PAGE> 23
MATERIALS REVIEWED. In connection with rendering its April 20, 1994
opinion, Chaffe reviewed materials bearing upon the transaction, and upon the
financial and operating condition of BNR, including, among other information:
(i) a draft of the Agreement; (ii) BNR's audited financial statements for the
years 1988 through 1993; (iii) BNR's unaudited financial statements for the
period ended March 31, 1994; (iv) BNR's Annual Report on Form 10-K for 1992,
and Form 10-KSB for 1993 and quarterly reports on Forms 10-Q for the quarters
ended March 31, June 30, and September 30, 1993; (v) BNR's Federal Reserve
Forms FR-Y6 dated as of December 31, 1992, and 1993; (vi) BNR's income tax
returns for the year 1992; (vii) the Bank's CALL Reports for the quarters ended
March 31, June 30, September 30, and December 31, 1992, and March 31, June 30,
September 30, and December 31, 1993; (viii) the Bank's Uniform Bank Performance
Reports for each quarter dated December 31, 1992, through December 31, 1993;
(ix) the Bank's unaudited financial statements for the period ended March 31,
1994; (x) the Bank's 1994 Budget; (xi) the Bank's capital plan for the years
1993 through 1998, dated January 17, 1994, under two scenarios (without and
with acquistions); (xii) the Articles of Incorporation and By-Laws of BNR, and
the Charter of the Bank; (xiii) various BNR and Bank management reports,
unaudited financial statements, information, documents, and correspondence; and
(xiv) statistical and financial information for BNR and the Bank and for
comparable companies derived from various statistical services, as well as
certain publicly available information. In addition, Chaffe reviewed: (xv)
Regions' audited financial statements for the years 1987 through 1990, 1992,
and 1993; (xvi) Regions' Proxy Statement for the Annual Stockholders Meeting
held in 1988 through 1991, 1993, and 1994; (xvii) Regions' Annual Reports on
Form 10-K for the years 1987 through 1990, 1992, and 1993, and quarterly
reports on Form 10-Q for the quarters ended June 30 and September 30, 1993;
(xviii) Regions' unaudited quarterly statements for the quarters ended March
31, 1988, through December 31, 1993; and (xix) statistical financial
information for Regions and for comparable companies derived from various
statistical services, as well as certain publicly available information and
analysts' reports on Regions.
In connection with rendering the Proxy Statement Opinion, Chaffe
reviewed, in addition to the above, the following materials: (xx) the
Agreement; (xxi) the Registration Statement of which this Proxy
Statement/Prospectus is a part; (xxii) BNR's unaudited financial statements for
the period ended June 30, 1994; (xxiii) BNR's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1994; (xxiv) BNR's income tax return for the year
1993; (xxv) the Bank's CALL Report for the quarter ended March 31, 1994; (xxvi)
the Bank's Uniform Bank Performance Report for March 31, 1994; (xxvii) the
Bank's unaudited financial statements for the period ended June 30, 1994;
(xxviii) various BNR and Bank reports, information, documents, and
correspondence; (xxix) Regions' audited financial statements for 1991; (xxx)
Regions' Proxy Statement for the Annual Stockholders Meeting held in 1992;
(xxxi) Regions' Annual Report on Form 10-K for the year 1991 and quarterly
report on Form 10-Q for the quarter ended March 31, 1993; (xxxii) Regions'
Registration Statement on Form S-3, dated June 21, 1994; and (xxxiii)
additional statistical information for BNR and Regions and for comparable
companies derived from various statistical services, as well as certain
publicly available information and analysts' reports on Regions.
ANALYSIS OF SELECTED FINANCIAL DATA. In prepartion of both the April
20, 1994 opinion and the Proxy Statement Opinion, Chaffe analyzed the
historical performance of BNR and considered the current financial condition,
operations, and prospects for BNR. Chaffe reviewed certain historical market
information for BNR Common Stock and noted that no independent market exists
for such shares. Chaffe analyzed information and data provided by the
management of BNR concerning the loans, other real estate, securities
portfolio, fixed assets, and operations of BNR, although Chaffe did not perform
an independent review of BNR's assets or liabilities. Chaffe relied solely on
BNR for information as to the adequacy of the loan loss reserve and the value
of repossessed assets.
At April 20, 1994, Chaffe noted strengths of BNR, including its
consistent record of profitability ( with a return on assets in 1993 of 1.47%
and a return on equity in 1993 of 13.11%), strong equity (with the ratio of
tangible equity to total assets as of March 31, 1994, of 10.97%), and low
non-performing assets (with the ratio of nonperforming assets to total assets
as of the end of March 1994 of 0.95%). Chaffe also noted certain weaknesses
of BNR, including its low non-interest-bearing deposits (constituting 7.78% of
all deposits as of the end of March 1994) and a slightly high overhead
expense (with the ratio of noninterest expenses to average assets of 3.51% in
1993).
Also, Chaffe analyzed the historical performance of Regions and
considered the current financial condition, operations, and prospects for
Regions. At April 20, 1994, Chaffe noted that, as of March 31, 1994, the
return on average assets annualized for 1994 was approximately 1.30% and the
return on average equity, also annualized for 1994, was approximately 15.55%.
Regions' ratio of tangible equity to total assets as of the end of March 1994
was 8.41%, and the ratio of nonperforming assets to total assets as of the end
of March 1994 was 0.63%.
ANALYSIS OF TRANSACTION. In connection with rendering its opinions,
and preparing its various written and oral presentations to the BNR Board,
Chaffe performed a variety of financial analyses. Chaffe compared certain
financial and stock market data for peer groups of bank holding companies whose
securities are publicly traded; reviewed the financial terms of business
combinations in the commercial banking industry specifically and other
industries generally; considered a number of valuation methodologies, including,
among others, those that incorporate book value, deposit base premium, and
capitalization of earnings; and performed such other studies and analyses as
Chaffe deemed appropriate for purposes of its opinions. Chaffe's opinions were
necessarily based upon market, economic, and other conditions as they existed
on, and could be evaluated as of, the respective dates of its opinions.
In its review, Chaffe relied, without independent verification, upon
the accuracy and completeness of the historical and projected financial
information and other information reviewed by it for purposes of its opinions.
Chaffe expressed no opinion on the tax consequences of the proposed transaction
or the effect of any tax consequences on the value received by the holders of
BNR Common Stock.
The following is a summary of selected analyses performed by Chaffe in
connection with the opinions. The summary set forth below does not purport to
be a complete description of the analyses performed in this regard. Chaffe
believes that the summary set forth below and Chaffe's analyses must be
considered as a whole and that selecting portions of its analyses, without
considering all of its analyses, creates an incomplete view of the process
underlying Chaffe's opinions.
ANALYSIS OF SELECTED MERGER TRANSACTIONS. In connection with its April
20, 1994 opinion, Chaffe performed an analysis of premiums paid for selected
banks with comparable characteristics to BNR. Comparable transactions were
considered to be transactions in the United States for the period January 1,
1993, through March 28, 1994, in which the seller had total assets of between
$50 million and $500 million, a leverage ratio greater than 8.0%, a return on
average assets greater than 0.50%, and nonperforming assets less than 2.0% of
total assets. In addition, Chaffe performed an analysis of premiums paid for a
similar group of selected banks, limited in geographic area to 17 states
in the southern United States. Finally, Chaffe performed an analysis of
premiums paid for substantially all Louisiana banks sold during the period
January 1, 1993 through March 28, 1994. The Louisiana transactions considered
in this analysis included, in addition to the Merger (Acquiror/Acquiree):
Premier Bancorp/Red River Valley Bank; Premier Bancorp/Heritage Financial
Corp.; Premier Bancorp/National Bank of Commerce; Premier Bancorp/Alerion
Corp.; First Alabama Bancshares/Guaranty Bancorp; Hibernia Corporation/First
Continental Bank; Hibernia Corporation/First Bancorp of Louisiana; Hibernia
Corporation/Bastrop National Bank; Hibernia Corporation/Commercial Bancshares,
Inc.; First Bancorp of Louisiana/Southern National; First Commerce
Corporation/First Acadiana National Bank; and Hancock Holding Company/First
State B&T Company. With respect to each of these groups of transactions and
the proposed merger, Chaffe compared the prices to be received by the
stockholders of each institution being acquired as a multiple of its tangible
equity, its earnings per share for the four quarters prior to such a
transaction, its premium over tangible equity to core deposits, and its total
assets. The following table summarizes certain results of this analysis:
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<PAGE> 24
REGIONS/ U.S. SOUTHERN LOUISIANA
BNR PEER GROUP PEER GROUP PEER GROUP
--- ---------- ---------- ----------
(Dollars in thousands)
Seller Total Assets
- Mean $154,327 $143,555 $198,756
- Median $142,440 114,040 102,799 173,316
Seller Tangible Equity 10.97% 9.68% 9.37% 9.72%
Seller YTD ROAA* 1.30 1.39 1.34 1.38
Seller YTD ROAE* 11.79 13.16 13.17 16.69
Seller NPA/Assets 1.22 0.77 0.59 1.44
Price/Tangible Equity 166.00 168.57 179.22 169.15
Price/4-Quarter EPS 14.10x 13.82x 14.04x 12.07x
Price-Tangible Equity/Core
Deposits 9.43 9.05 9.56 9.56
Price/Assets 18.25 17.17 17.70 16.38
___________________________
*BNR earnings for the four quarters ended March 31, 1994, net of
FASB 109 adjustment.
In connection with the Proxy Statement Opinion, Chaffe performed an
additional analysis of premiums paid for selected banks with comparable
characteristics to BNR. Each of the above described peer groups was updated
through July 21, 1994. Additional Louisiana transactions considered in this
analysis included (Acquiror/Acquiree): First Commerce Corporation/Lakeside
Bancshares, Inc.; First Commerce Corporation/First Bancshares, Inc.; Hibernia
Corporation/Pioneer Bancshares; Regions Financial Corporation/American
Bancshares, Inc.; Deposit Guaranty/LBO Bancorp, Inc.; First Commerce
Corporation/City Bancorp, Inc.; Iberville Trust & Savings Bank/Bayoulands
Financial Corporation; and Hancock Holding Company/Washington Bancorp. With
respect to each of these groups of transactions and the proposed merger, Chaffe
compared the prices to be received by stockholders of each institution being
acquired in the same manner as described above, and found results substantially
similiar to those shown above, with the exception of the Louisiana
transactions. The Louisiana peer group showed the following median pricing
multiples: Price-to-tangible equity - 186.47%; price-to-earnings per share for
the four quarters prior to such a transaction - 13.07%; price-to-premium over
tangible equity divided by core deposits - 10.73%; and price-to-assets -
17.32%.
Conclusions based on these analyses are not mathematical. Accordingly,
an analysis of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies, as well as other factors that affect the public trading value or
the acquisition value of the companies to which BNR is being compared.
Discounted Cash Flow Analysis. Using discounted cash flow ("DCF")
analysis, Chaffe estimated the present value of the future stream of after-tax
cash flows that BNR could produce through 1999, under various circumstances,
assuming that BNR performed in accordance with the capital plans prepared by
management. Chaffe estimated the terminal value for BNR under various
assumptions and then discounted the cash flow streams and terminal value as
appropriate, using differing discount rates (ranging from 8.3% to 12.5%),
chosen to reflect different assumptions regarding the required rates of return
of BNR and the inherent risks surrounding the capital plans. Additional DCF
analyses were performed at the time of the Proxy Statement Opinion, using
similar methodology and discount rates to the previously described DCF
analysis, and found substantial similar results to those previously found.
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<PAGE> 25
CERTAIN LIMITATIONS. In arriving at its fairness opinion, Chaffe
considered the analyses outlined above. Chaffe did not rely on any single
analysis, but relied on a combination of factors derived from all of the
analytical procedures employed. The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to partial analysis or
summary description. The summary set forth above does not purport to be a
complete description of Chaffe's analyses. Chaffe believes that the summary
set forth above and Chaffe's analyses must be considered as a whole and that
selecting portions of its analyses, without considering all of its analyses,
creates an incomplete view of the process underlying Chaffe's opinions.
The analyses performed by Chaffe are not necessarily indicative of
actual values or actual future results, which may be significantly more or less
favorable than suggested by such analyses. Additionally, analyses relating to
the value of businesses do not purport to be appraisals or necessarily reflect
the prices at which businesses actually may be sold. Furthermore, Chaffe may
have given various analyses more or less weight than other analyses and may
have deemed various assumptions more or less probable than other assumptions,
so that the ranges of valuations resulting from any particular analysis
described above should not be taken to be Chaffe's view of the actual value of
either BNR or Regions. The fact that any specific analysis has been referred
to in the summary above is not meant to indicate that such analysis was given
greater weight than any other analysis.
COMPENSATION. Prior to its retention in July 1993 to act as BNR's
financial advisor, Chaffe had provided no services to BNR. Chaffe has not
provided any services to Regions. Neither Chaffe nor any of its officers or
employees has any interest in BNR Common Stock or Regions Common Stock.
BNR has paid Chaffe approximately $150,000 in fees for its services
since July 6, 1993, including its services in rendering the Proxy Statement
Opinion. The fees received by Chaffe in connection with its services to BNR
were not dependent or contingent upon the occurrence or lack thereof of any
transaction.
EFFECTIVE DATE OF THE MERGER
Subject to the conditions to the obligations of the parties to effect
the Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Louisiana Certificate of Merger relating
to the Merger are filed and declared effective with, respectively, the Delaware
Secretary of State and the Louisiana Secretary of State. Unless otherwise
agreed upon by Regions and BNR, and subject to the conditions to the
obligations of the parties to effect the Merger, the parties will use their
reasonable efforts to cause the Effective Date to occur on the last business
day of the month in which the last of the following events occurs: (i) the
effective date (including the expiration of any applicable waiting period) of
the last federal or state regulatory approval required for the Merger and (ii)
the date on which the Agreement is approved by the requisite vote of BNR
stockholders; or such later date within 30 days thereof as specified by
Regions.
No assurance can be provided that the necessary stockholder and
regulatory approvals can be obtained or that other conditions precedent to the
Merger can or will be satisfied. Regions and BNR anticipate that all conditions
to consummation of the Merger will be satisfied so that the Merger can be
consummated during the third quarter of 1994. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either Regions or BNR generally may
terminate the Agreement if the Merger is not consummated by March 31, 1995,
unless the failure to consummate by that date is the result of a breach of the
Agreement by the party seeking termination. See " -- Conditions to Consummation
of the Merger" and " -- Waiver, Amendment, and Termination of the Agreement."
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<PAGE> 26
DISTRIBUTION OF REGIONS STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
Promptly after the Effective Date, Regions will cause the Exchange
Agent to mail to the former stockholders of BNR a form letter of transmittal,
together with instructions for the exchange of such stockholders' certificates
representing shares of BNR Common Stock for certificates representing shares of
Regions Common Stock.
BNR STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY
RECEIVE THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS. Upon surrender to the
Exchange Agent of certificates for BNR Common Stock, together with a properly
completed letter of transmittal, there will be issued and mailed to each holder
of BNR Common Stock surrendering such items, a certificate or certificates
representing the number of shares of Regions Common Stock to which such holder
is entitled, if any, and a check for the amount to be paid in lieu of any
fractional share interest, without interest. After the Effective Date, to the
extent permitted by law, BNR stockholders of record as of the Effective Date
will be entitled to vote at any meeting of holders of Regions Common Stock the
number of whole shares of Regions Common Stock into which their BNR Common
Stock has been converted, regardless of whether such stockholders have
surrendered their BNR Common Stock certificates. Whenever a dividend or other
distribution is declared by Regions on the Regions Common Stock, the record
date for which is at or after the Effective Date, the declaration shall include
dividends or other distributions on all shares issuable pursuant to the
Agreement, but no dividend or other distribution payable after the Effective
Date with respect to Regions Common Stock will be paid to the holder of any
unsurrendered BNR certificate until the holder duly surrenders such
certificate. However, upon surrender of such BNR Common Stock certificate, both
the Regions Common Stock certificate, together with all such undelivered
dividends or other distributions (without interest), and any undelivered cash
payments to be paid for fractional share interests (without interest) shall be
delivered and paid with respect to each share represented by such certificate.
After the Effective Date, there will be no transfers of shares of BNR
Common Stock on BNR's stock transfer books. If certificates representing shares
of BNR Common Stock are presented for transfer after the Effective Date, they
will be canceled and exchanged for the shares of Regions Common Stock and a
check for the amount due in lieu of fractional shares, if any, deliverable in
respect thereof.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to a number of conditions,
including, but not limited to:
(a) approval from the Federal Reserve and the Louisiana Commissioner,
without any conditions or restrictions that, in the reasonable judgment
of BNR's Board of Directors (as to approval conditioning or restricting the
operations of BNR) or Regions' Board of Directors, would so materially adversely
impact the economic or business benefits of the transactions contemplated by
the Agreement as to render inadvisable the consummation of the Merger;
(b) the approval by the required vote of the holders of BNR Common
Stock represented at the Special Meeting;
(c) the absence of any action by any court or governmental authority
restraining or prohibiting the Merger;
(d) the receipt of a satisfactory opinion of counsel that the Merger
qualifies for federal income tax treatment as a reorganization under Section
368(a) of the Code and that the exchange of BNR Common Stock for Regions Common
Stock will not give rise to recognition of gain or loss to BNR stockholders,
except to the extent of any cash received; and
(e) the approval for listing on the Nasdaq National Market of the
shares of Regions Common Stock to be issued in the Merger.
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<PAGE> 27
Consummation of the Merger also is subject to the satisfaction or
waiver of various other conditions specified in the Agreement, including, among
others: (i) the delivery by Regions and BNR of opinions of their respective
counsel and certificates executed by their respective chief executive officers
and chief financial officers as to compliance with the Agreement and (ii) as of
the Effective Date, the accuracy of certain representations and warranties and
the compliance in all material respects with the agreements and covenants of
each party.
REGULATORY APPROVALS
The Merger may not proceed in the absence of receipt of the requisite
regulatory approvals. Applications for the approvals described below have
been submitted to the appropriate regulatory agencies, and each of such agencies
has approved the Merger without the imposition of a condition as described
above under "--Conditions to Consummation of the Merger."
Regions and BNR are not aware of any material governmental approvals
or actions that are required for consummation of the Merger, except as
described below. Should any other approval or action be required, it presently
is contemplated that such approval or action would be sought.
The Merger requires the prior approval of the Federal Reserve,
pursuant to Section 3 of the BHC Act. In granting its approval under
Section 3 of the BHC Act, the Federal Reserve considered, among other factors,
the financial and managerial resources and future prospects of the institutions
and the convenience and needs of the communities to be served. The relevant
statutes prohibit the Federal Reserve from approving the Merger (i) if it would
result in a monopoly or be in furtherance of any combination or conspiracy to
monopolize or attempt to monopolize the business of banking in any part of the
United States or (ii) if its effect in any section of the country may be to
lessen substantially the competition or to tend to create a monopoly, or if it
would be a restraint of trade in any other manner, unless the Federal Reserve
finds that any anticompetitive effects are outweighed clearly by the public
interest and the probable effect of the transaction in meeting the convenience
and needs of the communities to be served. Under the BHC Act, the Merger may
not be consummated until the 30th day following the date of Federal Reserve
approval, during which time the United States Department of Justice may
challenge the transaction on antitrust grounds. The commencement of any
antitrust action would stay the effectiveness of the Federal Reserve's
approval, unless a court specifically orders otherwise.
The Merger also is subject to the approval of the Louisiana
Commissioner. In its evaluation, the Louisiana Commissioner considered factors
similar to those applied by the Federal Reserve.
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
Prior to the Effective Date, and to the extent permitted by law, any
provision of the Agreement generally may be (i) waived by the party benefitted
by the provision or (ii) amended by a written agreement between Regions and BNR
approved by their respective Boards of Directors; provided, however, that after
approval by the BNR stockholders, no amendment decreasing the consideration to
be received by BNR stockholders may be made without the further approval of
such stockholders.
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date, either before or after approval by BNR
stockholders, under certain circumstances, including:
(a) by the Board of Directors of either party upon final denial of
any required regulatory approval, or by the Board of Directors of Regions if
any required regulatory approval is conditioned or restricted in the manner
described above under " -- Conditions to Consummation of the Merger";
(b) by the Board of Directors of either party, if the stockholders of
BNR fail to vote their approval
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<PAGE> 28
of the Agreement;
(c) by mutual agreement of the Boards of Directors of Regions and BNR;
(d) by the Board of Directors of either party, in the event of a
breach of any provision of the Agreement which meets certain standards
specified in the Agreement; or
(e) by the Board of Directors of either party if the Merger shall not
have been consummated by March 31, 1995, but only if the failure to consummate
the Merger by such date has not been caused by the terminating party's breach
of the Agreement.
If the Agreement is terminated, the parties will have no further
obligations, except with respect to certain provisions, including those
providing for payment of expenses and restricting disclosure of confidential
information. Further, termination will not relieve the parties from the
consequences of any uncured willful and knowing breach of the Agreement giving
rise to such termination.
CONDUCT OF BUSINESS PENDING THE MERGER
BNR generally has agreed, unless the prior consent of Regions is
obtained, and except as otherwise contemplated by the Agreement, to operate its
business only in the ordinary course, preserve intact its business
organizations and assets, and maintain its rights and franchises. Regions has
agreed to continue to conduct its business in a manner designed in its
reasonable judgment to enhance the long-term value of Regions Common Stock,
to enhance the business prospects of Regions and its subsidiaries, and to the
extent consistent therewith, to preserve intact the core businesses and goodwill
of Regions. Each of BNR and Regions has agreed not to take any action that
would affect, adversely and materially, the ability of either party to perform
its covenants and agreements under the Agreement or to obtain any consent or
approval required for the consummation of the transactions contemplated by the
Agreement. In addition, the Agreement contains certain other restrictions
applicable to the conduct of the business of either BNR or Regions prior to
consummation of the Merger, as described below.
BNR. BNR has agreed not to take certain action relating to the
operation of its business pending consummation of the Merger without the prior
approval of Regions. Those actions generally include, without limitation: (i)
amending its articles of incorporation or bylaws; (ii) incurring, or permitting
any of its subsidiaries to incur, any additional debt or other obligation for
borrowed money in excess of an aggregate of $150,000 (except in the ordinary
course of business consistent with past practices); (iii) acquiring or
exchanging any shares of its capital stock or any securities convertible into
such shares, or paying any distribution in respect of its capital stock, other
than dividends at generally the 1993 annualized rate; (iv) issuing, selling, or
otherwise disposing of any additional shares of BNR capital stock or of capital
stock of any BNR company, any rights to acquire any such stock, or any security
convertible into such stock (except as set forth in the Agreement or pursuant
to the exercise of outstanding stock options); (v) adjusting or reclassifying
any capital stock ; (vi) acquiring direct or indirect control over any other
entity; (vii) granting any increase in compensation or benefits to employees or
officers of any BNR company (except as disclosed to Regions or as required by
law), paying any bonus (except as disclosed to Regions or in accordance with
any existing program or plan), entering into or amending any severance
agreements with officers (except as disclosed to Regions), or granting any
increase in compensation or other benefits to directors of any BNR company;
(viii) entering into or amending any employment contract between any BNR
company and any person that it does not have the unconditional right to
terminate (except as disclosed to Regions and except for any amendment required
by law); (ix) adopting any new employee benefit plan or program of any BNR
company or materially changing any existing plan or program of any BNR company
(except as disclosed to Regions and except for any change required by law or
advisable to maintain the tax qualified status of any such plan); (x) making
any significant change in any tax or accounting methods or systems of internal
accounting controls (except in conformity to changes in tax laws or generally
accepted
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<PAGE> 29
accounting principles ("GAAP")); (xi) commencing any material litigation
(except in accordance with past practices) or settling any litigation for an
amount in excess of $100,000 or imposing material restrictions on the
operations of any BNR company; or (xii) modifying or terminating any material
contract.
In addition, BNR has agreed not to solicit, directly or indirectly,
any acquisition proposal from any other person or entity. BNR also has agreed
not to negotiate with respect to any such proposal, provide nonpublic
information to any party making such a proposal, or enter into any agreement
with respect to any such proposal, except in compliance with the fiduciary
obligations of its Board of Directors. In addition, BNR has agreed to use
reasonable efforts to cause its advisors and other representatives not to
engage in any of the foregoing activities.
REGIONS. The Agreement prohibits Regions, prior to the earlier of the
Effective Date and the termination of the Agreement, from taking any action that
would materially adversely affect the ability of either party to obtain the
requisite governmental approvals or to perform its covenants and agreements
under the Agreement. Regions has further agreed not to acquire or enter any
agreement to acquire any bank or other financial institution having its
principal business location in Pointe Coupee Parish, Louisiana before the
consummation of the Merger. Regions has agreed not to amend its Certificate of
Incorporation or By-laws in any manner which is adverse to and discriminates
against holders of BNR Common Stock.
MANAGEMENT FOLLOWING THE MERGER
Consummation of the Merger will not alter the present officers and
directors of Regions. Information concerning the management of Regions is
included in the documents incorporated herein by reference. See "Documents
Incorporated by Reference."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The Agreement provides
that Regions will, and will cause the Bank to, maintain all rights of
indemnification and advancement of expenses existing in favor of each person
entitled to indemnification from BNR or any of its subsidiaries on terms no
less favorable than the rights provided in the Articles of Incorporation or
Bylaws of BNR or its subsidiaries, as the case may be, or the rights otherwise
in effect on the date of the Agreement and that such rights will continue in
full force and effect for ten years from the Effective Date with respect to
matters occurring at or prior to the Effective Date. In addition, the Agreement
further provides that, for a period of one year after the Effective Date,
Regions shall use its reasonable efforts to maintain in effect BNR's existing
directors' and officers' liability insurance policy (or comparable policies)
with respect to claims arising from facts or events which occurred prior to the
Effective Date and covering persons who are currently covered by such
insurance; provided that Regions shall not be obligated to make premium
payments for such one-year period in respect of such policy which exceed 150%
of the annual premium payment for the prior fiscal year.
The Agreement further provides that Regions will indemnify and hold
harmless BNR and each of its directors and officers against any losses, claims,
damages, or liabilities arising out of or based upon an untrue statement or
alleged untrue statement of material fact contained in this Proxy
Statement/Prospectus or arising out of or based upon the omission or alleged
omission to state herein a material fact required to be stated herein or
necessary to make the statements herein not misleading and will reimburse each
such person for any legal or other expenses reasonably incurred by such person
in connection with investigating or defending any such action or claim;
provided, however, that Regions will not be liable in any such case to the
extent that any such loss, claim, damage, or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in this Proxy Statement/Prospectus in reliance upon and
in conformity with information furnished to Regions by any indemnified person.
EMPLOYEE BENEFITS. The Agreement also provides that, after the
Effective Date, Regions will provide generally to officers
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<PAGE> 30
and employees of BNR and its subsidiaries who become officers or employees of
Regions or its subsidiaries, employee benefits under employee benefit plans
(other than stock option plans) on terms and conditions that, taken as a whole,
are substantially similar to those currently provided by Regions and its
subsidiaries to their similarly situated officers and employees. For purposes
of participation and vesting (but not benefit accrual) under such employee
benefit plans, service with BNR or its subsidiaries prior to the Effective Date
will be treated as service with Regions or its subsidiaries. The Agreement
further provides that Regions will cause BNR to honor all employment,
severance, consulting, and other compensation contracts disclosed to Regions
between BNR or its subsidiaries and any current or former director, officer, or
employee, and all provisions for vested amounts earned or accrued through the
Effective Date under BNR's benefit plans.
DIRECTORS' DEFERRED COMPENSATION AGREEMENTS. The Bank maintains a
deferred compensation plan for its directors (the "Plan"). Under the Plan,
each participating director may elect to defer receipt of Board fees. The
total amount of this deferred compensation is an unfunded liability of the
Bank, and interest accrues on this amount during each year at a rate equal to
the Bank's "Annual Asset Earnings Rate," defined to mean the Bank's annual
total interest income divided by its average earnings assets, adjusted
annually. All current directors of the Bank are participants in the Plan and
have entered into deferred compensation agreements with the Bank to evidence
such participation. In general, the Plan is intended to permit each
participant to receive his or her deferred benefits following retirement
payable over 15 years. The benefits may become payable before retirement under
certain circumstances, including if the participant dies or ceases to be a
director. The amount of these payments is determined generally by the length
of participation in the Plan, the aggregate amount deferred by the participant,
and the rate of interest.
The deferred compensation agreement of each participant provides that,
if the participant resigns or is removed as a director of the Bank, or not
nominated for re-election, in each case for actions inimical to the Bank's
interests, the agreement terminates. In that event, the participant is entitled
to receive the value of his account, plus accrued interest to the date of
payment in a lump sum. If a participant ceases to be a director before
retirement for any other reason, other than death, the participant is entitled
to be paid his accrued benefits in installments over the 15-year period
following the date on which he or she ceases to be a director, or the
participant may elect to defer receipt of such benefits until his or her
planned retirement date.
The deferred compensation agreements have special provisions that apply
if a participant ceases to be a director of the Bank after the occurrence of a
"Change in Control," as defined in the Plan. A Change in Control under the Plan
is deemed to have occurred if a person, other than the Bank's Employee Stock
Ownership Trust, becomes the beneficial owner of securities of the Bank having
25% or more of the total votes that may be cast in the election of directors. A
Change in Control also is deemed to have occurred if, during any period of two
consecutive years, individuals who constitute the Board of Directors of the Bank
at the beginning of such period cease for any reason to constitute at least a
majority of the Board, unless the election or the nomination for election by the
Bank's stockholders of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of such period. The Merger will constitute a Change in Control under
the Plan since, as a result of the Merger, Regions will acquire all (i.e., more
than 25%) of the securities of the Bank entitled to vote in the election of
directors. If a participant ceases to be a director of the Bank within 24
months following the occurrence of a Change in Control for any reason other than
death or actions inimical to the Bank's interests, the participant is entitled
under the Plan to receive the benefits such participant otherwise would be
entitled to receive under such circumstances, but increased in amount by 50%.
Furthermore, if the Plan as a whole is terminated following a Change in Control,
the participants become entitled to receive a lump sum plan termination benefit
in lieu of any other benefits payable under the Plan equal to the greater of the
value of the participant's account at the date of termination increased in
amount by 30% or a lump sum amount specified in such participant's agreement.
With the exception of two participants whose account balances were less than
$3,000, the participants' account balances range from approximately $21,186
to $114,224, and the lump sum amounts payable to such participants range from
approximately $21,362 to $170,080. Accordingly, if within 24 months after the
Merger a director ceases to be a director, other than as a result of death or
for reasons inimical to the Bank, or if the Plan as a whole is terminated
following the Merger, one or more current directors would become eligible to
receive the additional benefits payable under the Plan in connection with a
Change in Control.
CHANGE OF CONTROL ARRANGEMENT. The Bank is party to a change of
control compensation agreement with Mr. Greely, the President and Chief
Executive Officer of BNR and the Bank. Mr. Greely became President and Chief
Executive Officer effective September 10, 1993, and the purpose of the change
of control agreement was to assure that, notwithstanding the occurrence of any
change of control affecting BNR or the Bank, Mr. Greely would receive his
monthly base salary for a period of at least two years beginning September 10,
1993. Accordingly, if Mr. Greely's employment with the Bank is terminated for
any reason other than death or for cause (as defined in the change of control
agreement), and he ceases to be paid monthly compensation at a rate equal to
his monthly base salary of $7,083.33 by the Bank or its successors, he will be
entitled to receive a lump sum payment equal to $170,000 reduced by the sum of
$7,083.33 for each month after September 10, 1993, for which he shall have been
paid his monthly base salary of $7,083.33. Under this agreement, a change of
control includes (i) an acquisition of 35% or more of the combined voting power
of BNR's outstanding stock by a person other than BNR or persons who are
directors of BNR, (ii) the occurrence of any merger, consolidation, or
reorganization to which BNR or the Bank is a party and is not the surviving
entity, or (iii) the sale of all or substantially all of the assets of BNR or
the Bank. Also, if Mr. Greely's base salary is reduced after the occurrence of
a change in control but before September 10, 1995, Mr. Greely will be entitled
to receive on September 10, 1995, an amount equal to the difference between the
amount he is actually paid during that period, and the sum of $7,083.33 for
each month elapsed during such period. The change of control agreement does
not entitle Mr. Greely to receive any fringe benefits or directors fees
following the termination of his employment.
REGIONS STOCK OWNERSHIP. As of the Record Date, directors and
executive officers of BNR owned no shares of Regions Common Stock.
DISSENTING STOCKHOLDERS
GENERAL. Each BNR stockholder who objects to the Merger shall be
entitled to the rights and remedies of dissenting stockholders provided in
Section 12:131 of the Louisiana Act, a copy of which is included as Appendix C
to this Proxy Statement/Prospectus.
STATUTORY REQUIREMENTS. The following is a summary of the steps to be
taken by a BNR stockholder who is interested in perfecting such holder's
dissenter's rights and should be read in conjunction with the full text of
Section 12:131 of the Louisiana Act. Each of the steps enumerated below must be
taken in strict compliance with the applicable provisions of the statute in
order for holders of BNR Common Stock to perfect their dissenters' rights. If
the Merger is approved by 80% or more of the total voting power of BNR, then
dissenters' rights of appraisal, in accordance with the Louisiana Act, will not
be available.
Any written objection, demand, or notice required by the Louisiana Act
in connection with the exercise of dissenters' rights should be sent to BNR at
107 East Main Street, New Roads, Louisiana 70760, Attention: Charles Ray Smith,
Corporate Secretary. It is recommended that all required documents to be
delivered by mail be sent by registered or certified mail with return receipt
requested.
Any holder of BNR Common Stock who disapproves of or objects to the
proposed Merger and who wishes to receive in cash the "fair value" of such
shares (determined immediately before the Merger is consummated) may elect to
do so by taking all of the following steps:
(a) Such stockholder must file with BNR, prior to or at the Special
Meeting, a written objection to the proposed Merger.
(b) Such stockholder must vote such holder's shares of BNR Common Stock
against the Merger. If the Merger is approved by the required vote, but by less
than 80% of the total voting power, and the Merger authorized thereby is
effected, BNR promptly thereafter shall give written notice thereof, by
registered mail, to each stockholder who filed such written objection to, and
voted such holder's shares against, the Merger, at such stockholder's last
address on BNR's records.
(c) Each such stockholder, within 20 days after the mailing of such
notice to such holder, but not thereafter, must file with BNR a demand in
writing for the fair cash value of such holder's shares of BNR Common Stock as
of the day before such vote was taken, and such holder must state in such demand
the value demanded, and a post office address to which the reply of BNR may be
sent.
(d) At the same time, such stockholder must deposit in escrow in a
chartered bank or trust company located in Pointe Coupee Parish the certificates
representing such holder's shares of BNR Common Stock, duly endorsed and
transferred to BNR upon the sole condition that such certificates shall be
delivered to BNR upon payment of the value of the shares determined in
accordance with the provisions of Section 12:131 of the Louisiana Act.
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(e) With the demand, the stockholder must deliver to BNR the written
acknowledgment of such bank or trust company that it so holds such holder's
certificates of BNR Common Stock.
Unless the objection, demand, and acknowledgment are made and
delivered by the stockholder within the required time period, such holder
conclusively shall be presumed to have acquiesced in the Merger. If BNR does not
agree to the value so stated and demanded, or does not agree that a payment is
due, within 20 days after receipt of such demand and acknowledgment, it shall
notify the stockholder in writing, at the designated post office address, of its
disagreement and shall state in such notice the value it will agree to pay if
any payment should be held to be due; otherwise it shall be liable for, and
shall pay to the dissatisfied stockholder, the value demanded.
In case of disagreement as to such fair cash value, or as to whether
any payment is due, after compliance by the parties with the provisions
described above, the dissatisfied stockholder, within 60 days after receipt of
notice in writing of BNR's disagreement, but not thereafter, may file suit
against BNR, or the merged or consolidated corporation, as the case may be, in
the district court of Pointe Coupee Parish, praying the court to fix and decree
the fair cash value of the dissatisfied stockholder's shares of BNR Common
Stock as of the day before such corporate action complained of was taken, and
the court, on such evidence as may be adduced in relation thereto, shall
determine summarily whether any payment is due and, if so, such cash value and
render judgment accordingly. Any stockholder entitled to file such suit, within
such 60-day period, but not thereafter, may intervene as a plaintiff in such
suit filed by another stockholder and recover therein judgment against BNR for
the fair cash value of such holder's shares of BNR Common Stock. Failure of the
stockholder to bring suit, or to intervene in such a suit, within 60 days after
receipt of notice of disagreement by BNR conclusively shall bind the
stockholder (i) by BNR's statement that no payment is due or (ii) if BNR does
not contend that no payment is due, to accept the value of such holder's shares
of BNR Common Stock as fixed by BNR in its notice of disagreement.
Any stockholder who fails to take each of the required actions outlined
above in a timely manner will not be entitled to exercise the rights of a
dissenting stockholder. Any stockholder who timely takes each of the required
actions outlined above thereafter shall retain all rights of a stockholder,
except the right to receive shares of Regions Common Stock, until those rights
are modified by the effectuation of the proposed Merger.
A stockholder, upon filing a demand for the value of such holder's
shares, shall cease to have any of the rights of a stockholder, except the
rights accorded by Section 12:131 of the Louisiana Act. Such a demand may be
withdrawn by the stockholder at any time before BNR gives notice of
disagreement, as provided by the Louisiana Act. After such notice of
disagreement is given, withdrawal of a notice of election shall require the
written consent of BNR. If a notice of election is withdrawn, or the Merger is
abandoned or rescinded, or a court shall determine that the stockholder is not
entitled to receive payment for such holder's shares of BNR Common Stock, or
the stockholder shall otherwise lose such holder's dissenter's rights, such
holder shall not have the right to receive payment for such holder's shares of
BNR Common Stock, such holder's share certificates shall be returned (and, on
such holder's request, new certificates shall be issued in exchange for the old
ones endorsed to BNR), and such holder shall be reinstated to all rights as a
stockholder as of the filing of his demand for value, including any intervening
preemptive rights, and the right to payment of any intervening dividend or
other distribution, or if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of BNR, the fair value thereof in cash as determined by the BNR Board
or, if the Merger shall have been consummated, the Regions Board as of the time
of such expiration or completion, but without prejudice otherwise to any
corporate proceedings that may have been taken in the interim.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
THE FOLLOWING IS A SUMMARY OF CERTAIN ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER. THIS SUMMARY IS BASED ON THE FEDERAL INCOME TAX
LAWS NOW IN EFFECT AND AS CURRENTLY INTERPRETED; IT DOES
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NOT TAKE INTO ACCOUNT POSSIBLE CHANGES IN SUCH LAWS OR INTERPRETATIONS,
INCLUDING AMENDMENTS TO APPLICABLE STATUTES OR REGULATIONS OR CHANGES IN
JUDICIAL OR ADMINISTRATIVE RULINGS, SOME OF WHICH MAY HAVE RETROACTIVE EFFECT.
THIS SUMMARY DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF THE POSSIBLE FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER AND IS NOT INTENDED AS TAX ADVICE TO ANY
PERSON. IN PARTICULAR, AND WITHOUT LIMITING THE FOREGOING, THIS SUMMARY DOES
NOT ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO STOCKHOLDERS
IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES OR STATUS (FOR EXAMPLE, AS FOREIGN
PERSONS, TAX-EXEMPT ENTITIES, DEALERS IN SECURITIES, INSURANCE COMPANIES, AND
CORPORATIONS, AMONG OTHERS). NOR DOES THIS SUMMARY ADDRESS ANY CONSEQUENCES OF
THE MERGER UNDER ANY STATE, LOCAL, ESTATE, OR FOREIGN TAX LAWS. STOCKHOLDERS,
THEREFORE, ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE MERGER, INCLUDING TAX RETURN REPORTING
REQUIREMENTS, THE APPLICATION AND EFFECT OF FEDERAL, FOREIGN, STATE, LOCAL, AND
OTHER TAX LAWS, AND THE IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
A federal income tax ruling with respect to this transaction was not
requested from the Internal Revenue Service. Instead, Alston & Bird, special
counsel to Regions, has rendered an opinion to Regions and BNR concerning
certain federal income tax consequences of the proposed Merger under federal
income tax law. It is such firm's opinion that:
(a) Provided the Merger qualifies as a statutory merger under the
Delaware GCL and the Louisiana Act, the Merger will be a reorganization within
the meaning of Section 368(a)(1)(A). BNR and Regions will each be "a party to a
reorganization" within the meaning of Section 368(b).
(b) BNR will recognize no gain or loss upon the transfer of its
assets to Regions in exchange solely for Regions Common Stock and the
assumption by Regions of the liabilities of BNR.
(c) No gain or loss will be recognized by Regions on receipt of BNR's
assets in exchange for Regions Common Stock.
(d) The basis of BNR's assets in the hands of Regions will, in each
case, be the same as the basis of those assets in the hands of BNR immediately
prior to the transaction.
(e) The holding period of the assets of BNR in the hands of Regions
will, in each case, include the period during which such assets were held by
BNR.
(f) The stockholders of BNR will recognize no gain or loss upon the
exchange of their BNR Common Stock solely for shares of Regions Common Stock.
(g) The basis of the Regions Common Stock received by the BNR
stockholders in the proposed transaction will, in each instance, be the same as
the basis of the BNR Common Stock surrendered in exchange therefor.
(h) The holding period of the Regions Common Stock received by the
BNR stockholders will, in each instance, include the period during which the
BNR Common Stock surrendered in exchange therefor was held, provided that the
BNR Common Stock was held as a capital asset on the date of the exchange.
(i) The payment of cash to BNR stockholders in lieu of fractional
share interests of Regions Common Stock will be treated for federal income tax
purposes as if the fractional shares were distributed as part of the exchange
and then were redeemed by Regions. These cash payments will be treated as
having been received as distributions in full payment in exchange for the stock
redeemed as provided in Section 302(a).
(j) Where solely cash is received by a BNR stockholder in exchange
for his BNR Common Stock pursuant to the exercise of dissenters' rights, such
cash will be treated as having been received in redemption of his BNR Common
Stock, subject to the provisions and limitations of Section 302.
THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, OR OTHER TAX
CONSEQUENCES OF THE MERGER. BNR
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STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES OF THE PROPOSED TRANSACTION TO THEM INDIVIDUALLY, INCLUDING TAX
CONSEQUENCES UNDER STATE OR LOCAL LAW.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a
"pooling of interests," as that term is used pursuant to GAAP, for accounting
and financial reporting purposes. Under the pooling-of-interests method of
accounting, assets, liabilities, and equity of the acquired company are carried
forward to the combined entity at their historical amounts. See "Summary --
Comparative Per Share Data."
EXPENSES AND FEES
The Agreement provides, in general, that each of the parties will bear
and pay its own expenses in connection with the transactions contemplated by
the Agreement, including fees and expenses of its own financial or other
consultants, investment bankers, accountants, and counsel, except that Regions
will bear and pay the filing fees and printing costs in connection with this
Proxy Statement/Prospectus.
RESALES OF REGIONS COMMON STOCK
The Regions Common Stock to be issued to BNR stockholders in the
Merger has been registered under the Securities Act, but that registration does
not cover resales of those shares by persons who control, are controlled by, or
are under common control with, BNR (such persons are referred to hereinafter as
"affiliates" and generally include executive officers, directors, and 10%
stockholders) at the time of the Special Meeting. Affiliates may not sell
shares of Regions Common Stock acquired in connection with the Merger, except
pursuant to an effective registration statement under the Securities Act or in
compliance with SEC Rule 145 or another applicable exemption from the
Securities Act registration requirements.
Each person whom BNR reasonably believes to be an affiliate of BNR has
delivered to Regions a written agreement providing that such person generally
will not sell, pledge, transfer, or otherwise dispose of any Regions Common
Stock to be received by such person upon consummation of the Merger, except in
compliance with the Securities Act and the rules and regulations of the SEC
promulgated thereunder.
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the Merger, holders of BNR Common Stock will be
exchanging their shares of a Louisiana corporation governed by the Louisiana
Act and BNR's Articles of Incorporation, as amended (the "Articles"), and
Bylaws, for shares of Regions, a Delaware corporation governed by the Delaware
GCL and Regions' Certificate of Incorporation (the "Certificate") and Bylaws.
Certain significant differences exist between the rights of BNR stockholders
and those of Regions stockholders. Certain differences identified by BNR and
Regions are summarized below. In particular, Regions' Certificate and Bylaws
contain several provisions that may be deemed to have an antitakeover effect in
that they could impede or prevent an acquisition of Regions unless the
potential acquirer has obtained the approval of Regions' Board of Directors.
The following discussion is necessarily general; it is not intended to be a
complete statement of all differences affecting the rights of stockholders and
their respective entities, and it is qualified in its entirety by reference to
the Louisiana Act and the Delaware GCL as well as to Regions' Certificate and
Bylaws and BNR's Articles and Bylaws.
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ANTITAKEOVER PROVISIONS GENERALLY
The provisions of Regions' Certificate and Bylaws described below
under the headings, "Authorized Capital Stock," "Amendment of Certificate of
Incorporation and Bylaws," "Classified Board of Directors and Absence of
Cumulative Voting," "Removal of Directors," "Director Exculpation," "Special
Meetings of Stockholders," "Actions by Stockholders Without a Meeting,"
"Stockholder Nominations and Proposals," and "Mergers, Consolidations, and
Sales of Assets Generally," and the provisions of the Delaware GCL described
under the heading "Business Combinations With Certain Persons," are referred to
herein as the "Protective Provisions." In general, one purpose of the
Protective Provisions is to assist Regions' Board of Directors in playing a
role in connection with attempts to acquire control of Regions, so that the
Board can further and protect the interests of Regions and its stockholders as
appropriate under the circumstances, including, if the Board determines that a
sale of control is in their best interests, by enhancing the Board's ability to
maximize the value to be received by the stockholders upon such a sale.
Although Regions' management believes the Protective Provisions are,
therefore, beneficial to Regions' stockholders, the Protective Provisions also
may tend to discourage some takeover bids. As a result, Regions' stockholders
may be deprived of opportunities to sell some or all of their shares at prices
that represent a premium over prevailing market prices. On the other hand,
defeating undesirable acquisition offers can be a very expensive and
time-consuming process. To the extent that the Protective Provisions discourage
undesirable proposals, Regions may be able to avoid those expenditures of time
and money.
The Protective Provisions also may discourage open market purchases by
a potential acquirer. Such purchases may increase the market price of Regions
Common Stock temporarily, enabling stockholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the Protective
Provisions may decrease the market price of Regions Common Stock by making the
stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The Protective Provisions
also may make it more difficult and time consuming for a potential acquirer to
obtain control of Regions through replacing the Board of Directors and
management. Furthermore, the Protective Provisions may make it more difficult
for Regions' stockholders to replace the Board of Directors or management, even
if a majority of the stockholders believes such replacement is in the best
interests of Regions. As a result, the Protective Provisions may tend to
perpetuate the incumbent Board of Directors and management.
AUTHORIZED CAPITAL STOCK
REGIONS. The Certificate authorizes the issuance of up to 120,000,000
shares of Regions Common Stock, of which 42,538,946 shares were issued,
including 1,474,579 treasury shares as of March 31, 1994. Regions' Board of
Directors may authorize the issuance of additional authorized shares of Regions
Common Stock without further action by Regions' stockholders, unless such
action is required in a particular case by applicable laws or regulations or by
any stock exchange upon which Regions' capital stock may be listed.
The authority to issue additional shares of Regions Common Stock
provides Regions with the flexibility necessary to meet its future needs
without the delay resulting from seeking stockholder approval. The authorized
but unissued shares of Regions Common Stock will be issuable from time to time
for any corporate purpose, including, without limitation, stock splits, stock
dividends, employee benefit and compensation plans, acquisitions, and public or
private sales for cash as a means of raising capital. Such shares could be used
to dilute the stock ownership of persons seeking to obtain control of Regions.
In addition, the sale of a substantial number of shares of Regions Common Stock
to persons who have an understanding with Regions concerning the voting of such
shares, or the distribution or declaration of a dividend of shares of Regions
Common Stock (or the right to receive Regions Common Stock) to Regions
stockholders, may have the effect of discouraging or increasing the cost of
unsolicited attempts to acquire control of Regions.
BNR. BNR's authorized capital stock consists of 5,000,000 shares of
BNR Common Stock, of which
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337,500 shares were issued, including 11,282 treasury shares, as of March 31,
1994. Under the Louisiana Act, the BNR Board may issue additional authorized
shares of BNR Common Stock without further action of the BNR stockholders. The
Louisiana Act provides that stockholders will have only such preemptive rights
to purchase or subscribe to any unissued authorized shares or any option or
warrant for the purchase thereof as may be provided in the articles of
incorporation. The BNR Articles do not grant any preemptive rights to the BNR
stockholders.
AMENDMENT OF CERTIFICATE OR ARTICLES OF INCORPORATION AND BYLAWS
REGIONS. The Delaware GCL generally provides that the approval of a
corporation's board of directors and the affirmative vote of a majority of (i)
all shares entitled to vote thereon and (ii) the shares of each class of stock
entitled to vote thereon as a class, is required to amend a corporation's
certificate of incorporation, unless the certificate specifies a greater voting
requirement. The Certificate states that its provisions regarding authorized
capital stock, election, classification, and removal of directors, the approval
required for certain business combinations, meetings of stockholders, and
amendment of the Certificate and Bylaws may be amended or repealed only by the
affirmative vote of the holders of at least 75% of the outstanding shares of
Regions voting stock, voting together as a single class.
The Certificate also provides that the Board of Directors has the
power to adopt, amend, or repeal the Bylaws. Any action taken by the
stockholders with respect to adopting, amending, or repealing any Bylaws may be
taken only upon the affirmative vote of the holders of at least 75% of the
voting power of Regions' voting stock.
BNR. The Louisiana Act generally provides that a Louisiana
corporation's articles of incorporation may be amended by the affirmative vote
of at least two-thirds of the voting power present, or by such larger or
smaller percentage of the voting power present, but not less than a majority,
as the articles of incorporation require. The BNR Articles provide that those
provisions of the BNR Articles that pertain to (i) the election, classification,
and removal of directors, (ii) the approval required for certain business
combinations, and (iii) the amendment of the BNR Articles, may be amended or
repealed only by the affirmative vote of the holders of 75% of the total voting
power of BNR. All other provisions of the BNR Articles, including those
pertaining to authorized capital stock and meetings of stockholders, may be
amended, altered, changed, or repealed by the affirmative vote of a majority of
the voting power present. The BNR Articles and Bylaws also provide that the BNR
Board may adopt, amend, or repeal the BNR Bylaws, and the BNR stockholders may
adopt, amend, or repeal any Bylaws by the affirmative vote of the holders of
75% of the total voting power of BNR's voting stock.
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
REGIONS. The Certificate provides that Regions' Board of Directors is
divided into three classes, with each class to be as nearly equal in number as
possible. The directors in each class serve three-year terms of office.
The effect of Regions' having a classified Board of Directors is that
only approximately one-third of the members of the Board is elected each year,
which effectively requires two annual meetings for Regions' stockholders to
change a majority of the members of the Board.
Pursuant to the Certificate, each stockholder generally is entitled to
one vote for each share of Regions stock held and is not entitled to cumulative
voting rights in the election of directors. With cumulative voting, a
stockholder has the right to cast a number of votes equal to the total number
of such holder's shares multiplied by the number of directors to be elected.
The stockholder has the right to cast all of such holder's votes in favor of
one candidate or to distribute such holder's votes in any manner among any
number of candidates. Directors are elected by a plurality of the total votes
cast by all stockholders. With cumulative voting, it may be possible for
minority stockholders to obtain representation on the Board of Directors.
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Without cumulative voting, the holders of more than 50% of the shares of
Regions Common Stock generally have the ability to elect 100% of the directors.
As a result, the holders of the remaining Regions Common Stock effectively may
not be able to elect any person to the Board of Directors. The absence of
cumulative voting, therefore, could make it more difficult for a stockholder who
acquires less than a majority of the shares of Regions Common Stock to obtain
representation on Regions' Board of Directors.
BNR. The BNR Articles and Bylaws state that BNR's Board shall be
divided into three classes as nearly equal in number as possible, with the
directors in each class to serve three-year terms of office.
The BNR Bylaws also state that each stockholder of BNR is entitled to
one vote for each share of BNR stock held. The Louisiana Act states that the
articles of incorporation may provide for cumulative voting, but the BNR
Articles do not provide for cumulative voting.
REMOVAL OF DIRECTORS
REGIONS. Under the Certificate, any director or the entire Board of
Directors may be removed only for cause and only by the affirmative vote of the
holders of 75% or more of Regions' voting stock.
BNR. Pursuant to BNR's Articles, any director may be removed, at any
special meeting called for that purpose, only for cause and only by the
affirmative vote of 75% or more of the voting power of BNR.
LIMITATIONS ON DIRECTOR LIABILITY
REGIONS. The Certificate provides that a director of Regions will
have no personal liability to Regions or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability for (i) any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) the payment of
certain unlawful dividends and the making of certain unlawful stock purchases
or redemptions, or (iv) any transaction from which the director derived an
improper personal benefit.
Although this provision does not affect the availability of injunctive
or other equitable relief as a remedy for a breach of duty by a director, it
does limit the remedies available to a stockholder who has a valid claim that a
director acted in violation of such director's duties, if the action is among
those as to which liability is limited. This provision may reduce the
likelihood of stockholder derivative litigation against directors and may
discourage or deter stockholders or management from bringing a lawsuit against
directors for breach of their duties, even though such action, if successful,
might have benefitted Regions and its stockholders. The SEC has taken the
position that similar provisions added to other corporations' certificates of
incorporation would not protect those corporations' directors from liability
for violations of the federal securities laws.
BNR. The BNR Articles provide that a director of BNR will not have
personal liability to BNR or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability resulting from (i) any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) unlawful
distribution of the corporation's assets to, or redemption or repurchase of the
corporation's shares from, stockholders of BNR, under and to the extent
provided in the Louisiana Act, or (iv) any transaction in which the director
derived an improper personal benefit.
INDEMNIFICATION
REGIONS. The Certificate provides that Regions will indemnify its
officers, directors, employees, and agents to the full extent permitted by the
Delaware GCL. Under Section 145 of the Delaware GCL as currently in effect,
other than in actions brought by or in the right of Regions, such
indemnification would apply if it
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were determined in the specific case that the proposed indemnitee acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of Regions and, with respect to any criminal
proceeding, if such person had no reasonable cause to believe that the conduct
was unlawful. In actions brought by or in the right of Regions, such
indemnification probably would be limited to reasonable expenses (including
attorneys' fees) and would apply if it were determined in the specific case
that the proposed indemnitee acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of Regions,
except that no indemnification may be made with respect to any matter as to
which such person is adjudged liable to Regions, unless, and only to the extent
that, the court determines upon application that, in view of all the
circumstances of the case, the proposed indemnitee is fairly and reasonably
entitled to indemnification for such expenses as the court deems proper. To the
extent that any director, officer, employee, or agent of Regions has been
successful on the merits or otherwise in defense of any action, suit, or
proceeding, as discussed herein, whether civil, criminal, administrative, or
investigative, such person must be indemnified against reasonable expenses
incurred by such person in connection therewith.
BNR. The BNR Articles and Bylaws provide that BNR shall indemnify the
officers and directors of the Bank, and may indemnify the employees and agents
of BNR or the Bank, to the full extent permitted by Section 12:83 of the
Louisiana Act. The provisions of the Louisiana Act permit more extensive
indemnification than that provided under the Delaware GCL and provides that the
indemnification and advancement of expenses provisions under the Louisiana Act
are not exclusive of any other rights to which the person receiving
indemnification or advancement of expenses is entitled under, among other
things, any bylaws of the corporation; provided that no such other
indemnification measure shall permit indemnification of any person for the
results of such person's willful or intentional misconduct.
SPECIAL MEETINGS OF STOCKHOLDERS
REGIONS. Regions' Certificate and Bylaws provide that such meetings
may be called at any time, but only by the chief executive officer, the
secretary, or the Board of Directors of Regions. Regions stockholders do not
have the right to call a special meeting or to require that Regions' Board of
Directors call such a meeting. This provision, combined with other provisions
of the Certificate and the restriction on the removal of directors, would
prevent a substantial stockholder from compelling stockholder consideration of
any proposal (such as a proposal for a business combination) over the
opposition of Regions' Board of Directors by calling a special meeting of
stockholders at which such stockholder could replace the entire Board with
nominees who were in favor of such proposal.
BNR. Under BNR's Bylaws, special meetings of the stockholders, for
any purpose or purposes, may be called by the president, Board of Directors, or
the holders of not less than one-third of all shares of BNR voting stock.
ACTIONS BY STOCKHOLDERS WITHOUT A MEETING
REGIONS. The Certificate provides that any action required or
permitted to be taken by Regions stockholders must be effected at a duly called
meeting of stockholders and may not be effected by any written consent by the
stockholders. These provisions would prevent stockholders from taking action,
including action on a business combination, except at an annual or special
meeting called by the Board of Directors, even if a majority of the
stockholders were in favor of such action.
BNR. Under the Louisiana Act, any action which may be taken at a
meeting of BNR's stockholders may be taken without a meeting if the written
consent thereto is signed by all of the stockholders entitled to vote thereon.
33
<PAGE> 38
STOCKHOLDER NOMINATIONS AND PROPOSALS
REGIONS. Regions' Certificate and Bylaws provide that any nomination
by stockholders of individuals for election to the Board of Directors must be
made by delivering written notice of such nomination (the "Nomination Notice")
to the secretary of Regions not less than 14 days nor more than 50 days before
any meeting of the stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given to
stockholders, the Nomination Notice must be delivered to the secretary of
Regions not later than the seventh day following the day on which notice of the
meeting was mailed to stockholders. The Nomination Notice must set forth
certain background information about the persons to be nominated, including
information concerning (i) the name, age, business, and, if known, residential
address of each nominee, (ii) the principal occupation or employment of each
such nominee, and (iii) the number of shares of Regions capital stock
beneficially owned by each such nominee. The Board of Directors is not required
to nominate in the annual proxy statement any person so proposed; however,
compliance with this procedure would permit a stockholder to nominate the
individual at the stockholders' meeting, and any stockholder may vote such
holder's shares in person or by proxy for any individual such holder desires.
BNR. Neither the Louisiana Act nor the BNR Articles or Bylaws set
forth any provisions expressly forbidding or permitting a stockholder to submit
a proposal for consideration at a stockholders' meeting or to nominate any
person for election as a director or any procedure for stockholder nominations
and proposals.
BUSINESS COMBINATIONS WITH CERTAIN PERSONS
REGIONS. Section 203 of the Delaware GCL ("Section 203") places
certain restrictions on "business combinations" (as defined in Section 203
to include, generally, mergers, sales and leases of assets, issuances of
securities, and similar transactions) by Delaware corporations with an
"interested stockholder" (as defined in Section 203 to include, generally, the
beneficial owner of 15% or more of the corporation's outstanding voting stock).
Section 203 generally applies to Delaware corporations, such as Regions, that
have a class of voting stock listed on a national securities exchange,
authorized for quotation on an interdealer quotations system of a registered
national securities association, or held of record by more than 2,000
stockholders, unless the corporation expressly elects in its certificate of
incorporation or bylaws not to be governed by Section 203.
Regions has not specifically elected to avoid the application of
Section 203. As a result, Section 203 generally would prohibit a business
combination by Regions or a subsidiary with an interested stockholder within
three years after the person or entity becomes an interested stockholder,
unless (i) prior to the time when the person or entity becomes an interested
stockholder, Regions' Board of Directors approved either the business
combination or the transaction pursuant to which such person or entity became
an interested stockholder, (ii) upon consummation of the transaction in which
the person or entity became an interested stockholder, the interested
stockholder held at least 85% of the outstanding Regions voting stock
(excluding shares held by persons who are both officers and directors and
shares held by certain employee benefit plans), or (iii) once the person or
entity becomes an interested stockholder, the business combination is approved
by Regions' Board of Directors and by the holders of at least two-thirds of the
outstanding Regions voting stock, excluding shares owned by the interested
stockholder.
BNR. Sections 12:132-134 of the Louisiana Act (the "Fair Price
Provisions") place restrictions on "business combinations" (as defined in
Section 12:132(4) of the Louisiana Act to include, generally, mergers,
consolidations, share exchanges, sales and leases of assets, issuances of
securities, and similar transactions) by certain Louisiana corporations
(including BNR) with an "interested stockholder" (as defined in Section
12:132(9) of the Louisiana Act to include, generally, the beneficial owner of
10% or more of the voting power of the then outstanding voting stock). The Fair
Price Provisions generally do not apply if the stockholders receive in the
business combination consideration for their shares determined under a set of
complex provisions, the effect of which can be to deter certain acquisitions
of stock of a corporation that is subject to the Fair Price Provisions.
34
<PAGE> 39
A corporation is entitled under certain circumstances to elect not to
be subject to the Fair Price Provisions of the Louisiana Act respecting
business combinations. If such election is not made, and if Sections 12:132-134
of the Louisiana Act otherwise apply, Section 12:133 generally would prohibit a
business combination by BNR with an interested stockholder unless the business
combination is recommended by BNR's Board of Directors and approved by the
affirmative vote of at least each of the following: (i) 80% of the votes
entitled to be cast by outstanding shares of BNR voting stock voting together
as a single voting group and (ii) 66 2/3% of the votes entitled to be cast by
holders of BNR voting stock, other than voting stock held by the interested
stockholder who is a party to the business combination with BNR, voting
together as a single voting group. By resolution of its Board, BNR has elected
not to have the provisions of Sections 12:132-134 apply to the proposed Merger
and, accordingly, Section 133 does not apply to the Merger.
Under Sections 12:135 through 140.2 of the Louisiana Act (the "Control
Share Law"), a person who acquires shares in certain Louisiana corporations
(including BNR) and as a result increases such person's voting power in the
corporation to or above any of three threshold levels (i.e., 20%, 33 1/3%, and
50%), acquires the voting rights with respect to such shares only to the extent
granted by a majority of the pre-existing, disinterested stockholders of the
corporation. Certain acquisitions of shares are exempted from the provisions of
the Control Share Law, including acquisitions pursuant to a merger,
consolidation, or share exchange agreement to which the issuing public
corporation is a party. Since Regions' acquisition of BNR Common Stock is to be
made pursuant to a merger and BNR and Regions are parties to the Agreement with
respect thereto, the Control Share Law does not apply to the Merger.
MERGERS, CONSOLIDATIONS, AND SALES OF ASSETS GENERALLY
REGIONS. The Certificate generally requires the affirmative vote of
the holders of at least 75% of the outstanding voting stock of Regions to
effect (i) any merger or consolidation with or into any other corporation, or
(ii) any sale or lease of any substantial part of the assets of Regions to any
party that beneficially owns 5.0% or more of the outstanding shares of Regions
voting stock, unless the transaction was approved by Regions' Board of
Directors before the other party became a 5.0% beneficial owner or is approved
by 75% or more of the full Board after the party becomes such a 5.0% beneficial
owner.
BNR. Under BNR's Articles, the affirmative vote or consent of the
holders of 75% or more of the total voting power of BNR is required to approve
(i) a merger or consolidation of BNR or the Bank, with or into any other
corporation, (ii) any sale or lease of all or any substantial part of the assets
of BNR or the Bank to any other corporation, person, or other entity, or (iii)
any sale or lease to BNR or the Bank of any assets (except assets having an
aggregate fair market value of an amount less than 5.0% of the consolidated
stockholders' equity of BNR as reflected on its most recent year-end audited
financial statements) in exchange for voting securities of BNR or the Bank (or
securities convertible into such voting securities or options, warrants, or
rights to purchase such voting securities or securities convertible into such
voting securities), if such other corporation, person, or entity which is a
party to such transaction, is the beneficial owner, directly or indirectly, of
5.0% or more of BNR's outstanding common stock. However, the foregoing 75%
approval is not required (x) if BNR's Board of Directors approves a memorandum
of understanding with the other party to the transaction before such party
becomes a beneficial owner of more than 5.0% of the outstanding shares of BNR
Common Stock, or such transaction is unanimously approved by the full Board at
any time prior to the consummation of such transaction or (y) in any merger or
consolidation of BNR with, or any sale or lease to BNR or the Bank of any
assets of or sale or lease by BNR or the Bank of any of its assets to, any
corporation of which a majority of the outstanding shares of stock entitled to
vote in elections of directors is owned of record or beneficially by BNR. BNR's
Board approved a memorandum of understanding with Regions at a time when
Regions did not have beneficial ownership of any shares of BNR Common Stock and
has unanimously approved the Merger. Accordingly, this provision of the BNR
Articles is not applicable to the Merger.
35
<PAGE> 40
For transactions to which the foregoing 75% approval is not required,
certain other provisions of BNR's Articles and the Louisiana Act apply. The
Louisiana Act generally requires the affirmative vote of at least two-thirds of
the voting power present, or such larger or smaller vote, but not less than a
majority, of the voting power present or the total voting power as the articles
of incorporation may prescribe to effect (i) any merger or consolidation with
or into any other corporation or (ii) any sale or lease of any substantial part
of BNR's assets. The BNR Articles provide that a majority of BNR's voting power
is sufficient to constitute corporate action, unless a higher vote is made
mandatory by law or by another provision of the BNR Articles.
DISSENTERS' RIGHTS OF APPRAISAL
REGIONS. The rights of appraisal of dissenting stockholders of
Regions are governed by the Delaware GCL. Pursuant thereto, except as described
below, any stockholder has the right to dissent from any merger of which
Regions could be a constituent corporation. No appraisal rights are available,
however, for (i) the shares of any class or series of stock that is either
listed on a national securities exchange, quoted on the Nasdaq National Market,
or held of record by more than 2,000 stockholders or (ii) any shares of stock
of the constituent corporation surviving a merger if the merger did not require
the approval of the surviving corporation's stockholders, unless, in either
case, the holders of such stock are required by an agreement of merger or
consolidation to accept for that stock something other than: (a) shares of
stock of the corporation surviving or resulting from the merger or
consolidation; (b) shares of stock of any other corporation that will be listed
at the effective date of the merger on a national securities exchange, quoted
on the Nasdaq National Market, or held of record by more than 2,000
stockholders; (c) cash in lieu of fractional shares of stock described in
clause (a) or (b) immediately above; or (d) any combination of the shares of
stock and cash in lieu of fractional shares described in clauses (a) through
(c) immediately above. Because Regions Common Stock is quoted on the Nasdaq
National Market and is held of record by more than 2,000 stockholders, unless
the exception described immediately above applies, holders of Regions Common
Stock do not have dissenters' rights of appraisal.
BNR. The rights of appraisal of dissenting stockholders under
Louisiana law, while generally similar to those afforded under the Delaware
GCL, differ in certain details. For a full description of the rights of
dissenting stockholders under Louisiana law, see "Description of the
Transaction -- Dissenting Stockholders."
STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
REGIONS. The Delaware GCL provides that a stockholder may inspect
books and records upon written demand under oath stating the purpose of the
inspection, if such purpose is reasonably related to such person's interest as
a stockholder.
BNR. The Louisiana Act provides that any stockholder (other than a
business competitor) who has been a stockholder of record for at least 5.0% of
the outstanding shares of any class of stock of the corporation for at least
six months has the right to examine and inspect records and accounts of the
corporation upon at least five days written notice, so long as there is a
reasonable purpose. A business competitor who has held not less than 25% of all
outstanding shares of a corporation for a period of six months also may
exercise this right of inspection.
DIVIDENDS
REGIONS. The Delaware GCL provides that, subject to any restrictions
in the corporation's certificate of incorporation, dividends may be declared
from the corporation's surplus or, if there is no surplus, from its net
profits for the fiscal year in which the dividend is declared and the preceding
fiscal year. Dividends may not be declared, however, if the corporation's
capital has been diminished to an amount less than the aggregate amount of all
capital represented by the issued and outstanding stock of all classes having a
preference upon
36
<PAGE> 41
the distribution of assets. Substantially all of the funds available for the
payment of dividends by Regions are derived from its subsidiary depository
institutions. There are various statutory limitations on the ability of
Regions' subsidiary depository institutions to pay dividends to Regions. See
"Supervision and Regulation -- Dividends."
BNR. Pursuant to the Louisiana Act, the Board of BNR from time to
time may declare dividends in cash, property, or its own shares out of surplus,
except earned surplus reserved by the Board, unless BNR is insolvent or would
thereby be made insolvent or the declaration or payment of the dividend would
be contrary to any restrictions contained in the articles of incorporation. If
the corporation has no surplus available for dividends, it may pay dividends
out of its net profit for the then current or the preceding fiscal year or
both. However, no dividend may be paid at a time when, either before or after
the payment of the dividend, the corporation's liabilities exceed its assets
or the net assets are less than the aggregate amount payable on liquidation
upon the issued shares, if any, which have a preferential right to participate
in the corporation's assets in the event of liquidation. No dividends may be
paid in shares, other than treasury shares, except upon transfer to stated
capital from capital surplus of (i) an amount not less than the aggregate par
value of the issued par value shares and (ii) such amount as the board of
directors of the corporation may determine in respect of issued shares without
par value. No dividend payable in shares of any class shall be paid to
stockholders of any other class, unless the articles of incorporation so permit
or such payment is authorized by the holders of a majority of the shares of the
class in which the payment is to be made. Substantially all of the funds
available for the payment of dividends by BNR are derived from the Bank. There
are various statutory limitations on the ability of the Bank to pay dividends
to BNR.
37
<PAGE> 42
COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions Common Stock is quoted on the Nasdaq National Market under the
symbol "RGBK." BNR Common Stock is not traded in any established market. The
following table sets forth, for the indicated periods, the high and low closing
sale prices for Regions Common Stock as reported on the Nasdaq National Market,
the high and low prices for BNR Common Stock and the cash dividends declared
per share of Regions Common Stock and BNR Common Stock for the indicated
periods. The stock prices and historical dividends for Regions have been
adjusted to reflect a 10% stock dividend paid by Regions on April 1, 1993. The
prices indicated for BNR are based on actual transactions in BNR Common Stock
of which BNR management is aware; however, for the indicated period there has
been only a very limited number of transactions and all such transactions have
involved limited numbers of shares in BNR Common Stock in the indicated
periods, and no assurance can be given that the indicated prices represent the
actual market value of the BNR Common Stock.
<TABLE>
<CAPTION>
REGIONS BNR
PRICE RANGE CASH DIVIDENDS PRICE RANGE CASH DIVIDENDS
----------- DECLARED ----------- DECLARED
HIGH LOW PER SHARE HIGH LOW PER SHARE
---- --- --------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
1992
First Quarter . . . . . . . . . . . . . . . . . . $28.13 $23.75 $.2275 $20.00 $20.00 $ --
Second Quarter . . . . . . . . . . . . . . . . . . 30.00 25.13 .2275 29.00 25.00 --
Third Quarter . . . . . . . . . . . . . . . . . . 30.75 27.50 .2275 33.00 25.00 --
Fourth Quarter . . . . . . . . . . . . . . . . . . 33.88 28.38 .2275 31.50 31.50 2.00
1993
First Quarter . . . . . . . . . . . . . . . . . . 38.38 31.25 .26 40.00 37.00 --
Second Quarter . . . . . . . . . . . . . . . . . . 38.25 30.25 .26 30.00 30.00 --
Third Quarter . . . . . . . . . . . . . . . . . . 35.25 31.25 .26 -- -- --
Fourth Quarter . . . . . . . . . . . . . . . . . . 35.00 29.63 .26 44.00 44.00 2.50
1994
First Quarter . . . . . . . . . . . . . . . . . . 33.50 30.13 .30 44.00 44.00 --
Second Quarter . . . . . . . . . . . . . . . . . . 36.13 30.50 .30 44.00 44.00 --
Third Quarter (through
July 21) . . . . . . . . . . . . . . . . . . 36.50 34.63 .30 44.00 44.00 --
</TABLE>
On July 21, 1994, the last reported sale price of Regions Common
Stock as reported on the Nasdaq National Market, and the price of BNR
Common Stock in the last known transaction, which occurred in the fourth quarter
of 1993, were $36.25 and $44.00, respectively. On March 16, 1994, the last
business day prior to public announcement of the proposed Merger, the last
reported sale price of Regions Common Stock as reported on the Nasdaq National
Market, and the last known price of BNR Common Stock, were $32.00 and $44.00,
respectively.
The holders of Regions Common Stock are entitled to receive dividends
when and if declared by the Board of Directors out of funds legally available
therefor. Regions has paid regular quarterly cash dividends since 1971.
Although Regions currently intends to continue to pay quarterly cash dividends
on the Regions Common Stock, there can be no assurance that Regions's dividend
policy will remain unchanged after completion of the Merger. The declaration
and payment of dividends thereafter will depend upon business conditions,
operating results, capital and reserve requirements, and the Board of
Directors' consideration of other relevant factors.
Regions is a legal entity separate and distinct from its subsidiaries
and its revenues depend in significant part on the payment of dividends from
its subsidiary financial institutions, particularly First Alabama Bank.
Regions's subsidiary depository institutions are subject to certain legal
restrictions on the amount of dividends they are permitted to pay. See
"Supervision and Regulation -- Dividends."
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<PAGE> 43
The holders of BNR Common Stock are entitled to receive dividends
when and if declared by the Board of Directors out of funds that are legally
available therefor. BNR has paid regular annual dividends for many years. If
the Merger were not consummated, it would be the intention of BNR to continue
paying annual cash dividends. However, there can be no assurance that BNR's
dividend policy would remain unchanged, since the declaration and payment of
dividends in the future would depend on business conditions, operating results,
capital and reserve requirements, the judgment of the Board of Directors and
other factors.
BUSINESS OF BNR
BNR is a bank holding company organized under the laws of the State of
Louisiana with its principal executive office located in New Roads, Louisiana.
BNR operates principally through the Bank, which is a state-chartered
commercial bank and which provides a range of retail banking services through
five offices in Pointe Coupee Parish and one office in East Baton Rouge Parish,
Louisiana. At March 31, 1994, BNR had total consolidated assets of
approximately $142.7 million, total consolidated deposits of approximately
$125.3 million, and total consolidated stockholders' equity of approximately
$15.6 million. BNR's principal executive office is located at 107 East Main
Street, New Roads, Louisiana 70760, and its telephone number at such address is
(504) 638-3791.
Additional information with respect to BNR and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. Copies of such documents, consisting of BNR's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1993, as amended,
including that portion of the BNR Annual Report to Stockholders incorporated by
reference therein, BNR's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994, and BNR's Current Report on Form 8-K dated as of March 16, 1994,
accompany this Proxy Statement/Prospectus.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF BNR
The following table sets forth certain information concerning the
beneficial owners of more than 5.0% of BNR Common Stock, as of June 16, 1994.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------- ------------------- -------------------- ----------
Common Stock Madeleine B. Caillet 18,336 5.62%
P.O. Box 67 Direct
Oscar, Louisiana 70762
39
<PAGE> 44
BUSINESS OF REGIONS
GENERAL
Regions is a regional bank holding company headquartered in Birmingham,
Alabama which operated as of June 1, 1994, 243 banking offices in Alabama,
Florida, Georgia, Louisiana, and Tennessee. At March 31, 1994, Regions had
total consolidated assets of approximately $10.4 billion, total consolidated
deposits of approximately $8.8 billion, and total consolidated stockholders'
equity of approximately $878 million. Regions operates five state-chartered
commercial bank subsidiaries and one federal stock savings bank (collectively,
the "Subsidiary Institutions") in the States of Alabama, Florida, Georgia,
Louisiana, and Tennessee and four banking-related subsidiaries engaged in
mortgage banking, credit life insurance, leasing, and securities brokerage
activities with offices in various Southeastern states. Through its
subsidiaries, Regions offers a broad range of banking and banking-related
services.
In Alabama, Regions operates through First Alabama Bank, which at March 31,
1994, had total consolidated assets of approximately $8.0 billion, total
consolidated deposits of approximately $6.9 billion, and total consolidated
stockholders' equity of approximately $658 million. First Alabama Bank operates
168 banking offices throughout Alabama.
In Florida, Regions operates through Regions Bank of Florida, which at
March 31, 1994, had total consolidated assets of approximately $473 million,
total consolidated deposits of approximately $422 million, and total
consolidated stockholders' equity of approximately $47 million. Regions Bank of
Florida operates 23 banking offices in the panhandle region of Florida.
In Georgia, Regions operates through Regions Bank of Georgia, which at
March 31, 1994, had total consolidated assets of approximately $106 million,
total consolidated deposits of approximately $96 million, and total consolidated
stockholders' equity of approximately $9 million. Regions Bank of Georgia
operates three banking offices in Columbus, Georgia.
In Louisiana, Regions operates through Secor Bank, Federal Savings Bank
("Secor"), a federal savings bank which Regions acquired on December 31, 1993,
and Guaranty Bancorp, Inc. ("Guaranty"), which Regions acquired on May 31, 1994.
At March 31, 1994, Secor's 15 Louisiana branches had total assets of
approximately $1.3 billion and total deposits of approximately $828 million. At
May 31, 1994, Guaranty had total consolidated assets of approximately $187
million, total consolidated deposits of approximately $173 million, and total
consolidated stockholders' equity of approximately $14 million. Secor and
Guaranty operate 21 banking offices in Louisiana.
In Tennessee, Regions operates through Regions Bank of Tennessee,
which at March 31, 1994, had total consolidated assets of approximately $455
million, total consolidated deposits of approximately $396 million, and total
consolidated stockholders' equity of approximately $37 million. Regions Bank of
Tennessee operates 24 banking offices in middle Tennessee.
Regions was organized under the laws of the State of Delaware and commenced
operations in 1971 under the name First Alabama Bancshares, Inc. On May 2, 1994,
the name of First Alabama Bancshares, Inc. was changed to Regions Financial
Corporation.
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<PAGE> 45
Regions continually evaluates business combination opportunities and
frequently conducts due diligence activities in connection with possible
business combinations. As a result, business combination discussions and, in
some cases, negotiations frequently take place, and future business
combinations involving cash, debt, or equity securities can be expected. Any
future business combination or series of business combinations that Regions
might undertake may be material, in terms of assets acquired or liabilities
assumed, to Regions' financial condition. Recent business combinations in the
banking industry have typically involved the payment of a premium over book and
market values. This practice could result in dilution of book value and net
income per share for the acquirer.
Additional information about Regions and its subsidiaries is included
in documents incorporated by reference in this Proxy Statement/Prospectus. See
"Available Information" and "Documents Incorporated by Reference."
RECENT DEVELOPMENTS
SECOND QUARTER 1994 OPERATING RESULTS. For the second quarter ended June 30,
1994, Regions had net income of $35,446,000 or $.84 per share, representing a
27% increase in net income over the same period of 1993. For the six months
ended June 30, 1994, Regions had net income of $69,220,000 or $1.65 per share,
representing an 11% increase on a per-share basis in net income over the first
half of 1993. The annualized return on average total assets for the first half
of 1994 was 1.32%, and the annualized return on average stockholders' equity
was 15.82%. At June 30, 1994, the ratio of stockholders' equity to total assets
was 8.37%. As of June 30, 1994, Regions had total consolidated assets of
approximately $10.8 billion, total consolidated deposits of approximately $8.8
billion, and total consolidated stockholders' equity of approximately $905
million.
RECENTLY COMPLETED ACQUISITIONS. Since December 31, 1993, Regions has
consummated the acquisitions (referred to as the "Recently Completed
Acquisitions") of Guaranty located in Baton Rouge, Louisiana, and First Fayette
Bancshares, Inc. ("First Fayette"), located in Fayette, Alabama, certain
aspects of which transactions are set forth below:
<TABLE>
<CAPTION>
CONSIDERATION
---------------
APPROXIMATE
------------------ ACCOUNTING
INSTITUTION ASSET SIZE VALUE TYPE TREATMENT
- ------------------------------------------------------- ---------- ----- ------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Guaranty Bancorp, Inc., and its subsidiary, Guaranty
Bank and Trust Company, located in Baton Rouge,
Louisiana............................................ $189 $28 Regions Pooling of
Common Interests
Stock
First Fayette Bancshares, Inc. and its subsidiary,
First Bank of Fayette, located in Fayette, Alabama... 77 17 Cash Purchase
------- ---- and
Notes
Totals....................................... $266 $45
======= ====
</TABLE>
Since December 31, 1993, Regions also has consummated certain transactions
with the Resolution Trust Corporation, as a result of which Regions acquired
four branch offices in Panama City, Florida, and one branch office in each of
Atmore and Brewton, Alabama with combined deposits of approximately $50 million.
OTHER PENDING ACQUISITIONS. As of the date of this Proxy Statement/Prospectus,
Regions has pending three acquisitions in addition to the acquisition of BNR
(referred to as the "Other Pending Acquisitions") in the States of Alabama,
Georgia, and Louisiana, certain aspects of which transactions are set forth
below:
<TABLE>
<CAPTION>
CONSIDERATION
--------------
APPROXIMATE ANTICIPATED
------------------ ACCOUNTING
INSTITUTION ASSET SIZE VALUE TYPE TREATMENT
- -------------------------------------------------------- ---------- ----- ------ -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
American Bancshares, Inc. ("ABI") and its subsidiary,
First American Bank and Trust Company of Louisiana,
located in Monroe, Louisiana.......................... $ 304 $ 61 Regions Purchase
Common
Stock
</TABLE>
<TABLE>
<CAPTION>
CONSIDERATION
--------------
APPROXIMATE ANTICIPATED
------------------ ACCOUNTING
INSTITUTION ASSET SIZE VALUE TYPE TREATMENT
- -------------------------------------------------------- ---------- ----- ------ -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
First Community Bancshares, Inc. ("First Community") and
its subsidiary,
First Bank of Rome, located in Rome, Georgia.......... $ 124 $ 24 Regions Pooling of
Common Interests
Stock
Union Bank & Trust Company ("Union"), located in
Montgomery, Alabama................................... 455 65 Regions Purchase
------- ---- Common
Stock
Totals........................................ $ 883 $ 150
======= ====
</TABLE>
The Recently Completed Acquisitions and the Other Pending Acquisitions are
referred to collectively as the "Other Acquisitions."
If the Other Acquisitions and the Merger all had been consummated on
March 31, 1994, based on March 31, 1994 pro forma financial information,
Regions' total consolidated assets would have increased by approximately $1.3
billion to approximately $11.7 billion; its total consolidated deposits would
have increased by approximately $1.2 billion to approximately $9.9 billion; and
its total consolidated stockholders' equity would have increased by
approximately $38 million to approximately $916 million. See "Summary Pro Form
Financial Information" and the related pro forma financial information in
Regions' Current Report on Form 8-K dated July 8, 1994. See "Documents
Incorporated by Reference."
Consummation of the Other Pending Acquisitions is subject to the approval
of certain regulatory agencies and of the stockholders of the institutions to
be acquired and to the effectiveness of the registration statements filed or to
be filed with the SEC. Moreover, the closing of each transaction is subject
to various contractual conditions precedent. No assurance can be given that the
conditions precedent to consummating the Other Pending Acquisitions will be
satisfied in a manner that will result in the consummation of all of the Other
Pending Acquisitions.
In connection with the acquisitions of ABI and Union, Regions has
announced that it may purchase, in the open market, an equivalent number of
some or all of the shares of Regions Common Stock to be issued in such
transactions. As a result of the ABI and Union transactions, Regions
anticipates that it may purchase in the open market as much as approximately
$126 million of Regions Common Stock. The timing and amount of such possible
purchases will be determined based on the Regions Common Stock price, capital
needs and other factors. As of July 15, 1994, Regions had purchased, in the
open market, approximately $24.7 million of Regions Common Stock pursuant to
this repurchase program.
41
<PAGE> 46
SUMMARY PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data give effect, as
appropriate, to the acquisitions of BNR, the Recently Completed Acquisitions,
and the Other Pending Acquisitions as of the dates and for the periods
indicated and pursuant to the accounting bases described below. The unaudited
pro forma financial data are presented for informational purposes only and are
not necessarily indicative of the combined financial position or results of
operations which actually would have occurred if the transactions had been
consummated at the date and for the periods indicated or which may be obtained
in the future. The information should be read in conjunction with the
unaudited pro forma financial information included in Regions' Current Report
on Form 8-K dated July 8, 1994. For additional information relating to
specific transactions within the scope of the Recently Completed Acquisitions
and the Other Pending Acquisitions (referred to collectively as the "Other
Acquisitions"), see "Business of Regions -- Recent Developments."
SELECTED PRO FORMA COMBINED DATA FOR REGIONS AND BNR
The following unaudited pro forma combined data give effect to the
acquisition of BNR as of the date or at the beginning of the periods indicated,
assuming such acquisition is treated as a pooling of interests.
<TABLE>
<CAPTION>
As of
March 31,
1994
-------------
(In thousands
except per
share data)
<S> <C>
Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,579,391
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,543,304
Loans, net of unearned income . . . . . . . . . . . . . . . . . . . . . . . . 6,912,806
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,892,316
Other borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . 469,794
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 893,871
Book value per common share . . . . . . . . . . . . . . . . . . . . . . . . . 21.36
</TABLE>
<TABLE>
<CAPTION>
Three Months
Ended Year Ended December 31,
March 31, -------------------------------------
1994 1993 1992 1991
------------ -------------------------------------
(In thousands except per share data)
<S> <C> <C> <C> <C>
Income Statement Data:
Total interest income . . . . . . . . . $173,299 $565,798 $547,226 $568,066
Total interest expense . . . . . . . . 74,343 216,963 228,055 298,012
-------- -------- -------- --------
Net interest income . . . . . . . . . . 98,956 348,835 319,171 270,054
Provision for loan losses . . . . . . . 4,416 21,753 27,212 24,080
-------- -------- -------- --------
Net interest income after loan loss
provision . . . . . . . . . . . . . . 94,540 327,082 291,959 245,974
Total noninterest income . . . . . . . 36,921 133,034 120,110 102,076
Total noninterest expense . . . . . . . 81,450 291,733 269,626 235,164
Income tax expense . . . . . . . . . . 16,455 54,300 45,540 33,744
-------- -------- -------- --------
Income before cumulative effect of
change in accounting principle. . . . $ 33,556 $114,083 $ 96,903 $ 79,142
======== ======== ======== ========
Income before cumulative effect of
change in accounting principle per
share . . . . . . . . . . . . . . . . $ 0.80 $ 3.00 $ 2.60 $ 2.14
Average common shares outstanding . . . 41,835 37,981 37,308 36,967
</TABLE>
SELECTED PRO FORMA COMBINED DATA FOR REGIONS, BNR, AND OTHER ACQUISITIONS
The following unaudited pro forma combined data as of March 31, 1994,
and for the three months ended March 31, 1994, and the year ended December 31,
1993, give effect to (i) the acquisitions of BNR, Guaranty, and First Community
by Regions, assuming such acquisitions are accounted for as
poolings of interests, and (ii) the acquisitions of First Fayette, Union, and
ABI by Regions, assuming such acquisitions are treated as purchases for
accounting purposes, as if all such transactions had been consummated on March
31, 1994, in the case of the data included under "Balance Sheet Data," and on
January 1, 1993, in the case of the data included under "Income Statement Data."
The following unaudited pro forma financial data for the years ended December
31, 1992, and 1991, give effect to the acquisitions of BNR, Guaranty, and First
Community by Regions, assuming such acquisitions are accounted for as
poolings of interests and had been consummated on January 1, 1991.
<TABLE>
<CAPTION>
As of
March 31,
1994
-------------
(In thousands
except per
share data)
<S> <C>
Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,694,320
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,800,867
Loans, net of unearned income . . . . . . . . . . . . . . . . . . . . . . . . 7,501,312
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,931,363
Other borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . 471,472
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 916,323
Book value per common share . . . . . . . . . . . . . . . . . . . . . . . . . 21.15
</TABLE>
<TABLE>
<CAPTION>
Three Months
Ended Year Ended December 31,
March 31, -------------------------------------
1994 1993 1992 1991
------------ -------------------------------------
(In thousands except per share data)
<S> <C> <C> <C> <C>
Income Statement Data:
Total interest income . . . . . . . . . $189,181 $630,718 $567,482 $586,474
Total interest expense . . . . . . . . 81,408 246,310 236,915 307,841
-------- -------- -------- --------
Net interest income . . . . . . . . . . 107,773 384,408 330,567 278,633
Provision for loan losses . . . . . . . 4,182 23,922 28,605 25,164
-------- -------- -------- --------
Net interest income after loan loss
provision . . . . . . . . . . . . . . 103,591 360,486 301,962 253,469
Total noninterest income . . . . . . . 40,084 144,121 122,287 103,786
Total noninterest expense . . . . . . . 90,989 329,508 276,838 241,123
Income tax expense . . . . . . . . . . 17,575 55,656 47,199 34,841
-------- -------- -------- --------
Income before cumulative effect of
change in accounting principle. . . . $ 35,111 $119,443 $100,212 $ 81,291
======== ======== ======== ========
Income before cumulative effect of
change in accounting principle per
share . . . . . . . . . . . . . . . . $ 0.81 $ 3.03 $ 2.58 $ 2.11
Average common shares outstanding . . . 43,329 39,475 38,802 38,461
</TABLE>
SUPERVISION AND REGULATION
The following discussion sets forth certain of the material elements
of the regulatory framework applicable to banks and bank holding companies and
provides certain specific information related to Regions.
GENERAL
Regions is a bank holding company, registered with the Federal Reserve
under the BHC Act. As such, Regions and its subsidiaries are subject to the
supervision, examination, and reporting requirements of the BHC Act and the
regulations of the Federal Reserve.
The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before (i) it may acquire direct or indirect
ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will directly or indirectly own or
control more than 5.0% of the voting shares of the bank, (ii) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of the bank, or (iii) it may merge or consolidate with any other bank
holding company.
The BHC Act further provides that the Federal Reserve may not approve
any transaction that would result in a monopoly or would be in furtherance of
any combination or conspiracy to monopolize or attempt to monopolize the
business of banking in any section of the United States, or the effect of which
may be substantially to lessen competition or to tend to create a monopoly in
any section of the country, or that in any other manner would be in restraint
of trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. Consideration of financial resources generally focuses on capital
adequacy and consideration of convenience and needs issues includes the
parties' performance under the Community Reinvestment Act of 1977 (the "CRA"),
both of which are discussed below.
The BHC Act prohibits the Federal Reserve from approving a bank
holding company's application to acquire a bank or bank holding company located
outside the state in which the deposits of its banking subsidiaries were
greatest on the date the company became a bank holding company (Alabama in the
case of Regions), unless such acquisition is specifically authorized by statute
of the state in which the bank or bank holding company to be acquired is
located. Alabama has adopted reciprocal interstate banking legislation
permitting Alabama-based bank holding companies to acquire banks and bank
holding companies in other states and allowing bank holding companies located
in Arkansas, the District of Columbia, Florida, Georgia, Kentucky, Louisiana,
Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Texas,
Virginia, and West Virginia to acquire Alabama banks and bank holding
companies.
The BHC Act generally prohibits Regions from engaging in activities
other than banking or managing or controlling banks or other permissible
subsidiaries and from acquiring or retaining direct or indirect control of any
company engaged in any activities other than those activities determined by the
Federal Reserve to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. In determining whether a particular
activity is permissible, the Federal Reserve must consider whether the
performance of such an activity reasonably can be expected to produce benefits
to the public, such as greater convenience, increased competition, or gains in
efficiency, that outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interest, or
unsound banking practices. For example, factoring accounts receivable,
acquiring or servicing loans, leasing personal property, conducting discount
securities brokerage activities, performing certain data processing services,
acting as agent or broker in selling credit life insurance and certain other
types of insurance in connection with credit transactions, and performing
certain insurance underwriting activities all have been determined by the
Federal Reserve to be permissible activities of bank holding companies. The BHC
Act does not place territorial
42
<PAGE> 47
limitations on permissible non-banking activities of bank holding companies.
Despite prior approval, the Federal Reserve has the power to order a holding
company or its subsidiaries to terminate any activity or to terminate its
ownership or control of any subsidiary when it has reasonable cause to believe
that continuation of such activity or such ownership or control constitutes a
serious risk to the financial safety, soundness, or stability of any bank
subsidiary of that bank holding company.
Each of the Subsidiary Institutions is a member of the Federal Deposit
Insurance Corporation ("FDIC"), and as such, their deposits are insured by
either the Bank Insurance Fund ("BIF") or the Savings Association Insurance
Fund ("SAIF") administered by the FDIC, to the extent provided by law. Each
Subsidiary Institution is also subject to numerous state and federal statutes
and regulations that affect its business, activities, and operations, and each
is supervised and examined by one or more state or federal bank regulatory
agencies.
Because each of Regions' subsidiary banks is a state-chartered bank
that is not a member of the Federal Reserve System, such banks are subject to
supervision and examination by the FDIC. Regions' subsidiary savings bank is a
federally-chartered savings bank that is a member of the Federal Home Loan Bank
System and is subject to supervision and examination by the Office of Thrift
Supervision ("OTS") and to the back-up supervisory authority of the FDIC. Such
agencies regularly examine the operations of the Subsidiary Institutions and
are given authority to approve or disapprove mergers, consolidations, the
establishment of branches, and similar corporate actions. Such agencies also
have the power to prevent the continuance or development of unsafe or unsound
banking practices or other violations of law.
The Subsidiary Institutions are subject to the provisions of the CRA.
Under the terms of the CRA, the appropriate federal bank regulatory agency is
required, in connection with its examination of a Subsidiary Institution, to
assess such institution's record in assessing and meeting the credit needs of
the community served by that institution, including low and moderate-income
neighborhoods. The regulatory agency's evaluation of the institution's record
is made available to the public. Further, such assessment is required of any
institution which has applied to (i) charter a national bank, (ii) obtain
deposit insurance coverage for a newly chartered institution, (iii) establish a
new branch office that will accept deposits, (iv) relocate an office, or (v)
merge or consolidate with, or acquire the assets or assume the liabilities of,
a federally regulated financial institution. In the case of a bank holding
company applying for approval to acquire a bank or other bank holding company,
the Federal Reserve will assess the records of each Subsidiary Institution of
the applicant bank holding company, and such records may be the basis for
denying the application.
In December 1993, the federal banking agencies proposed to revise their
CRA regulations in order to provide clearer guidance to depository institutions
on the nature and extent of their CRA obligations and the methods by which
those obligations will be assessed and enforced. The proposed regulations would
substitute for the current process-based CRA assessment factors a new
evaluation system that would rate institutions based on their actual
performance in meeting community credit needs. Under the proposal, all
depository institutions would be subject to three CRA-related tests: a lending
test; an investment test; and a service test. The lending test, which would be
the primary test for all institutions other than wholesale and limited-purpose
banks, would evaluate an institution's lending activities by comparing the
institution's share of housing, small business, and consumer loans in low- and
moderate-income areas in its service area with its share of such loans in the
other parts of its service area. The agencies would also evaluate the
institution's performance independent of other lenders by examining the ratio
of such loans made by the institution to low- and moderate-income areas to all
such loans made by the institution. At the election of an institution, the
agencies would also consider "indirect" loans made by affiliates and
subsidiaries of the institution as well as lending consortia and other lenders
in which the institution had made lawful investments.
The focus of the investment test, under which wholesale and
limited-purpose institutions would normally be evaluated, would be the amount
of assets (compared to its risk-based capital) that an institution has devoted
to "qualified investments" that benefit low- and moderate-income individuals
and areas in the institution's service area. The service test would evaluate an
institution based on the percentage of its branch offices that are located in
or are readily accessible to low- and moderate-income areas. Smaller
institutions, those having
43
<PAGE> 48
total assets of less than $250 million, would be evaluated under more
streamlined criteria.
The joint agency CRA proposal provides that an institution evaluated
under a given test would receive one of five ratings for that test:
outstanding; high satisfactory; low satisfactory; needs to improve; or
substantial non-compliance. The ratings for each test would then be combined to
produce an overall composite rating of either outstanding, satisfactory
(including both high and low satisfactory), needs to improve, or substantial
non-compliance. In the case of a retail-oriented institution, its lending test
rating would form the basis for its composite rating. That rating would then be
increased by up to two levels in the case of outstanding or high satisfactory
investment performance, increased by one level in the case of outstanding
service, and decreased by one level in the case of substantial non-compliance
in service. An institution found to have engaged in illegal lending
discrimination would be rebuttably presumed to have a less-than-satisfactory
composite CRA rating.
Under the proposal, an institution's CRA rating will continue to be
taken into account by a regulator in considering various types of applications.
In addition, an institution receiving a rating of "substantial non-compliance"
would be subject to civil money penalties or a cease and desist order under
Section 8 of the Federal Deposit Insurance Act (the "FDIA").
It is uncertain at this time whether, when, or in what form the CRA
proposal will ultimately be adopted by the federal banking agencies.
PAYMENT OF DIVIDENDS
Regions is a legal entity separate and distinct from its banking and
other subsidiaries. The principal source of cash flow of Regions, including
cash flow to pay dividends to its stockholders, is dividends from the
Subsidiary Institutions. There are statutory and regulatory limitations on the
payment of dividends by the Subsidiary Institutions to Regions as well as
Regions to its stockholders.
As state nonmember banks, the subsidiary banks are subject to the
respective laws and regulations of the States of Alabama, Florida, Georgia,
Louisiana, and Tennessee and to the regulations of the FDIC as to the payment
of dividends. The subsidiary savings bank is subject to the regulations of the
OTS as to payment of dividends.
If, in the opinion of the federal regulatory agencies, an institution
under its jurisdiction is engaged in or is about to engage in an unsafe or
unsound practice (which, depending on the financial condition of the
institution, could include the payment of dividends), such authority may
require, after notice and hearing, that such institution cease and desist from
such practice. The Federal Reserve, the FDIC, and the OTS have indicated that
paying dividends that deplete an institution's capital base to an inadequate
level would be an unsafe and unsound banking practice. Under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), an insured
institution may not pay any dividend if payment would cause it to become
undercapitalized or once it is undercapitalized. See "--Prompt Corrective
Action." Moreover, the Federal Reserve and the FDIC have issued policy
statements which provide that bank holding companies and insured banks should
generally only pay dividends out of current operating earnings.
At March 31, 1994, under dividend restrictions imposed under federal
and state laws, the Subsidiary Institutions, without obtaining governmental
approvals, could declare aggregate dividends to Regions of approximately $214
million.
The payment of dividends by Regions and the Subsidiary Institutions
may also be affected or limited by other factors, such as the requirement to
maintain adequate capital above regulatory guidelines.
TRANSACTIONS WITH AFFILIATES
There are various restrictions on the extent to which Regions and it
nonbank subsidiaries can borrow or
44
<PAGE> 49
otherwise obtain credit from the Subsidiary Institutions. Each Subsidiary
Institution (and its subsidiaries) is limited in engaging in borrowing and
other "covered transactions" with nonbank or non-savings bank affiliates to the
following amounts: (i) in the case of any such affiliate, the aggregate amount
of covered transactions of the Subsidiary Institution and its subsidiaries may
not exceed 10% of the capital stock and surplus of such Subsidiary Institution;
and (ii) in the case of all affiliates, the aggregate amount of covered
transactions of the Subsidiary Institution and its subsidiaries may not exceed
20% of the capital stock and surplus of such Subsidiary Institution. "Covered
transactions" are defined by statute to include a loan or extension of credit,
as well as a purchase of securities issued by an affiliate, a purchase of
assets (unless otherwise exempted by the Federal Reserve), the acceptance of
securities issued by the affiliate as collateral for a loan and the issuance of
a guarantee, and the issuance of a guarantee, acceptance, or letter of credit
on behalf of an affiliate. Covered transactions are also subject to certain
collateralization requirements. Further, a bank holding company and its
subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with any extension of credit, lease, or sale of property or
furnishing of services.
CAPITAL ADEQUACY
Regions and the Subsidiary Institutions are required to comply with
the capital adequacy standards established by the Federal Reserve in the case
of Regions, the FDIC in the case of the subsidiary banks, and the OTS in the
case of the subsidiary savings bank. There are two basic measures of capital
adequacy for bank holding companies that have been promulgated by the Federal
Reserve: a risk-based measure and a leverage measure. All applicable capital
standards must be satisfied for a bank holding company to be considered in
compliance.
The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profile among banks
and bank holding companies, to account for off-balance sheet exposure, and to
minimize disincentives for holding liquid assets. Assets and off-balance sheet
items are assigned to broad risk categories, each with appropriate weights. The
resulting capital ratios represent capital as a percentage of total
risk-weighted assets and off-balance sheet items.
The minimum guideline for the ratio of total capital ("Total Capital")
to risk-weighted assets (including certain off-balance-sheet items, such as
standby letters of credit) is 8.0%. At least half of the Total Capital must be
composed of common stock, minority interests in the equity accounts of
consolidated subsidiaries, noncumulative perpetual preferred stock, and a
limited amount of cumulative perpetual preferred stock, less goodwill and
certain other intangible assets ("Tier 1 Capital"). The remainder may consist
of subordinated debt, other preferred stock, and a limited amount of loan loss
reserves. At March 31, 1994, Regions' consolidated Tier 1 Capital and Total
Capital ratios were 11.7% and 14.1%, respectively.
In addition, the Federal Reserve has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a
minimum ratio of Tier 1 Capital to average assets, less goodwill and certain
other intangible assets (the "Leverage Ratio"), of 3.0% for bank holding
companies that meet certain specified criteria, including having the highest
regulatory rating. All other bank holding companies generally are required to
maintain a Leverage Ratio of at least 3.0% plus an additional cushion of 100 to
200 basis points. Regions' Leverage Ratio at March 31, 1994 was 8.0%. The
guidelines also provide that bank holding companies experiencing internal
growth or making acquisitions will be expected to maintain strong capital
positions substantially above the minimum supervisory levels without
significant reliance on intangible assets. Furthermore, the Federal Reserve has
indicated that it will consider a "tangible Tier 1 Capital leverage ratio"
(deducting all intangibles) and other indicia of capital strength in evaluating
proposals for expansion or new activities.
Each of Regions' subsidiary banks is subject to risk-based and
leverage capital requirements adopted by the FDIC and Regions' subsidiary
savings bank is subject to tangible, risk-based, and core capital requirements
adopted by the OTS. Each of Regions' Subsidiary Institutions was in compliance
with applicable minimum
45
<PAGE> 50
capital requirements as of December 31, 1993. Neither Regions nor any of the
Subsidiary Institutions has been advised by any federal banking agency of any
specific minimum capital ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank to a variety
of enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business. See "--Prompt Corrective
Action."
The federal bank regulators continue to indicate their desire to make
the capital requirements applicable to banking organizations responsive to
risks in addition to credit risk. In this regard, the Federal Reserve, the
FDIC, and the OTS have, pursuant to FDICIA, proposed an amendment to the
risk-based capital standards which would calculate the change in an
institution's net economic value attributable to increases and decreases in
market interest rates and would require banks with excessive interest rate risk
exposure to hold additional amounts of capital against such exposures.
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, Regions is expected to act as a source
of financial strength to, and to commit resources to support, each of the
Subsidiary Institutions. This support may be required at times when, absent
such Federal Reserve policy, Regions may not be inclined to provide it. In
addition, any capital loans by a bank holding company to any of the Subsidiary
Institutions are subordinate in right of payment to deposits and to certain
other indebtedness of such Subsidiary Institution. In the event of a bank
holding company's bankruptcy, any commitment by the bank holding company to a
federal bank regulatory agency to maintain the capital of a Subsidiary
Institution will be assumed by the bankruptcy trustee and entitled to a
priority of payment.
Under the FDIA, a depository institution insured by the FDIC can be
held liable for any loss incurred by, or reasonably expected to be incurred by,
the FDIC after August 9, 1989 in connection with (i) the default of a commonly
controlled FDIC-insured depository institution or (ii) any assistance provided
by the FDIC to any commonly controlled FDIC-insured depository institution "in
danger of default." "Default" is defined generally as the appointment of a
conservator or receiver and "in danger of default" is defined generally as the
existence of certain conditions indicating that a default is likely to occur in
the absence of regulatory assistance.
PROMPT CORRECTIVE ACTION
FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories ("well-capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized") and to take certain mandatory supervisory
actions, and are authorized to take other discretionary actions, with respect
to institutions in the three undercapitalized categories, the severity of which
will depend upon the capital category in which the institution is placed.
Generally, subject to a narrow exception, the FDICIA requires the banking
regulator to appoint a receiver or conservator for an institution that is
critically undercapitalized. The federal banking agencies have specified by
regulation the relevant capital level for each category.
Under the final agency rules implementing the prompt corrective action
provisions, an institution that (i) has a Total Capital ratio of 10% or
greater, a Tier 1 Capital ratio of 6.0% or greater, and a Leverage Ratio of
5.0% or greater, and (ii) is not subject to any written agreement, order,
capital directive, or prompt corrective action directive issued by the
appropriate federal banking agency, is deemed to be "well-capitalized." An
institution with a Total Capital ratio of 8.0% or greater, a Tier 1 Capital
ratio of 4.0% or greater, and a Leverage Ratio of 4.0% or greater is considered
to be "adequately capitalized." A depository institution that has a Total
Capital ratio of less than 8.0%, a Tier 1 Capital ratio of less than 4.0%, or a
46
<PAGE> 51
Leverage Ratio of less than 4.0% is considered to be "undercapitalized." A
depository institution that has a Total Capital ratio of less than 6.0%, a Tier
1 Capital ratio of less than 3.0%, or a Leverage Ratio of less than 3.0% is
considered to be "significantly undercapitalized" and an institution that has a
tangible equity capital to assets ratio equal to or less than 2.0% is deemed to
be "critically undercapitalized." For purposes of the regulation, the term
"tangible equity" includes core capital elements counted as Tier 1 capital for
purposes of the risk-based capital standards plus the amount of outstanding
cumulative perpetual preferred stock (including related surplus), minus all
intangible assets with certain exceptions. A depository institution may be
deemed to be in a capitalization category that is lower than is indicated by
its actual capital position if it receives an unsatisfactory examination
rating.
In the case of an institution that is categorized as undercapitalized,
significantly undercapitalized, or critically undercapitalized, the institution
is required to submit an acceptable capital restoration plan to its appropriate
federal banking agency. Under FDICIA, a bank holding company must guarantee
that a subsidiary depository institution meet its capital restoration plan,
subject to certain limitations. The obligation of a controlling bank holding
company under FDICIA to fund a capital restoration plan is limited to the
lesser of 5.0% of an undercapitalized subsidiary's assets or the amount
required to meet regulatory capital requirements. An undercapitalized
institution is also generally prohibited from increasing its average total
assets, making acquisitions, establishing any branches, or engaging in any new
line of business except in accordance with an accepted capital restoration plan
or with the approval of the FDIC. In addition, the appropriate federal banking
agency is given authority with respect to any undercapitalized depository
institution to take any of the actions it is required to or may take with
respect to a significantly undercapitalized institution as described below if
it determines "that those actions are necessary to carry out the purpose" of
FDICIA.
For those institutions that are (i) significantly undercapitalized or
(ii) undercapitalized and either fail to submit an acceptable capital
restoration plan or fail to implement an approved capital restoration plan, the
appropriate federal banking agency must require the institution to take one or
more of the following actions: (i) sell enough shares, including voting shares,
to become adequately capitalized; (ii) merge with (or be sold to) another
institution (or holding company), but only if grounds exist for appointing a
conservator or receiver; (iii) restrict certain transactions with banking
affiliates as if the "sister bank" exception to the requirements of Section 23A
of the Federal Reserve Act did not exist; (iv) otherwise restrict transactions
with bank or nonbank affiliates; (v) restrict interest rates that the
institution pays on deposits to "prevailing rates" in the institution's
"region;" (vi) restrict asset growth or reduce total assets; (vii) alter,
reduce, or terminate activities; (viii) hold a new election of directors; (ix)
dismiss any director or senior executive officer who held office for more than
180 days immediately before the institution became undercapitalized; provided
that in requiring dismissal of a director or senior officer, the agency must
comply with certain procedural requirements, including the opportunity for an
appeal in which the director or officer will have the burden of proving his or
her value to the institution; (x) employ "qualified" senior executive officers;
(xi) cease accepting deposits from correspondent depository institutions; (xii)
divest certain nondepository affiliates which pose a danger to the institution;
or (xiii) be divested by a parent holding company. In addition, without the
prior approval of the appropriate federal banking agency, a significantly
undercapitalized institution may not pay any bonus to any senior executive
officer or increase the rate of compensation for such an officer without
regulatory approval.
At March 31, 1994, all of Regions' Subsidiary Institutions had the
requisite capital levels to qualify as well capitalized.
BROKERED DEPOSITS
The FDIC has adopted regulations governing the receipt of brokered
deposits. Under the regulations, a depository institution cannot accept,
roll over, or renew brokered deposits unless (i) it is well capitalized or (ii)
it is adequately capitalized and receives a waiver from the FDIC. A depository
institution that cannot receive brokered deposits also cannot offer
"pass-through" insurance on certain employee benefit accounts. Whether
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or not it has obtained such a waiver, an adequately capitalized depository
institution may not pay an interest rate on any deposits in excess of 75 basis
points over certain prevailing market rates specified by regulation. There are
no such restrictions on a depository institution that is well capitalized.
Because all of the Subsidiary Institutions of Regions had at March 31, 1994,
the requisite capital levels to qualify as well capitalized, Regions believes
the brokered deposits regulation will have no material effect on the funding or
liquidity of any of the Subsidiary Institutions.
FDIC INSURANCE ASSESSMENTS
In July 1993, the FDIC adopted a new risk-based assessment system for
insured depository institutions that takes into account the risks attributable
to different categories and concentrations of assets and liabilities. The new
system, which went into effect on January 1, 1994, and replaces a transitional
system that the FDIC had utilized for the 1993 calendar year, assigns an
institution to one of three capital categories: (i) well capitalized; (ii)
adequately capitalized; and (iii) undercapitalized. These three categories are
substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. An institution is also
assigned by the FDIC to one of three supervisory subgroups within each capital
group. The supervisory subgroup to which an institution is assigned is based on
a supervisory evaluation provided to the FDIC by the institution's primary
federal regulator and information which the FDIC determines to be relevant to
the institution's financial condition and the risk posed to the deposit
insurance funds (which may include, if applicable, information provided by the
institution's state supervisor). An institution's insurance assessment rate is
then determined based on the capital category and supervisory category to which
it is assigned. Under the final risk-based assessment system, as well as the
prior transitional system, there are nine assessment risk classifications
(i.e., combinations of capital groups and supervisory subgroups) to which
different assessment rates are applied. Assessment rates for 1994 for both the
BIF and the SAIF, as they had during 1993, will range from .23% of deposits
for an institution in the highest category (i.e., "well-capitalized" and
"healthy" to .31% of deposits for an institution in the lowest category (i.e.,
"undercapitalized" and "substantial supervisory concern").
The FDIC is authorized to raise insurance premiums in certain
circumstances. The current assessment rates for the BIF and the SAIF are
designed to increase the reserve ratios (i.e., the ratios of reserves to
insured deposits) for both funds to a designated ratio -- 1.25% -- within a
specified period of time. Once the designated ratio is reached, the FDIC is
to set future assessment rates at such levels that will maintain a fund's
reserve ratio at the designated level. The attainment by either fund of its
designated reserve ratio could cause a reduction in assessment rates for that
fund.
Under the FDIA, insurance of deposits may be terminated by the FDIC
upon a finding that the institution has engaged in unsafe and unsound
practices, is in an unsafe or unsound condition to continue operations, or has
violated any applicable law, regulation, rule, order, or condition imposed by
the FDIC.
NEW SAFETY AND SOUNDNESS STANDARDS
In November 1993, federal banking agencies issued for comment proposed
safety and soundness standards relating to internal controls, information
systems and internal audit systems, loan documentation, credit underwriting,
interest rate exposure, asset growth, compensation, fees, and benefits. With
respect to internal controls, information systems, and internal audit systems,
the standards describe the functions that adequate internal controls and
information systems must be able to perform, including (i) monitoring adherence
to prescribed policies, (ii) effective risk management, (iii) timely and
accurate financial, operational, and regulatory reporting, (iv) safeguarding
and managing assets, and (v) compliance with applicable laws and regulations.
The standards also include requirements that (i) those performing internal
audits be qualified and independent, (ii) internal controls and information
systems be tested and reviewed, (iii) corrective actions be adequately
documented, and (iv) that results of an audit be made available for review of
management actions.
As in the case of internal controls and information systems, the
proposal establishes general principles and standards, rather than specific
requirements, that must be followed in other areas. For example, loan
documentation and credit underwriting practices must be such that they enable
the institution to make an
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informed lending decision and assess credit risk on an ongoing basis.
Similarly, an institution must manage interest rate risk "in a manner that is
appropriate to the size of [the institution] and the complexity of its assets
and liabilities" and must conduct any asset growth in accordance with a plan
that has taken a variety of factors such as deposit volatility, capital, and
interest rate risk into account. The proposal also prohibits "excessive
compensation," which is defined as amounts paid that are unreasonable or
disproportionate to the services performed by an officer, employee, director,
or principal stockholder in light of all circumstances. In order to help alert
institutions and their regulators to deteriorating financial conditions, the
proposed rule also would impose a maximum ratio of classified assets to total
capital of 1.0 and, in the case of an institution that had incurred a net loss
over the last four quarters, would require that institution to have sufficient
capital to absorb a similar loss over the next four quarters and still remain
in compliance with its minimum capital requirements.
DEPOSITOR PREFERENCE
Legislation recently enacted by Congress establishes a nationwide
depositor preference rule in the event of a bank failure. Under this
arrangement, all deposits and certain other claims against a bank, including
the claim of the FDIC as subrogee of insured depositors, would receive payment
in full before any general creditor of the bank would be entitled to any
payment in the event of an insolvency or liquidation of the bank.
DESCRIPTION OF REGIONS COMMON STOCK
Regions is authorized to issue 120,000,000 shares of Regions Common
Stock, of which 42,538,946 shares were issued, including 1,474,579 treasury
shares, at March 31, 1994. No other class of stock is authorized.
Holders of Regions Common Stock are entitled to receive such dividends
as may be declared by the Board of Directors out of funds legally available
therefore. Dividend payments are subject to certain limitations imposed in
Regions' debt instruments. Under the most restrictive of such limitations, $724
million was available for payment of dividends as of December 31, 1993.
However, the ability of Regions to pay dividends is further affected by the
ability of its Subsidiary Institutions to pay dividends, which is limited by
applicable regulatory requirements and capital guidelines. At March 31, 1994,
under such requirements and guidelines, the Subsidiary Institutions had $214
million of undivided profits legally available for the payment of dividends.
See "Supervision and Regulation -- Dividends."
For a further description of Regions Common Stock, see "Effect of the
Merger on Rights of Stockholders."
STOCKHOLDER PROPOSALS
Regions expects to hold its next annual meeting of stockholders after
the Merger during April 1995. Under SEC rules proposals of Regions stockholders
intended to be presented at that meeting must be received by Regions at its
principal executive offices no later than November 16, 1994, for consideration
by Regions for possible inclusion in such proxy materials.
If the Merger is not consummated, stockholder proposals of BNR
stockholders intended to be presented at the next annual meeting of
stockholders of BNR must be received by BNR at its principal executive offices
a reasonable time before the date of BNR's proxy statement released to its
stockholders for that meeting for consideration by BNR for possible inclusion
in such proxy materials.
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EXPERTS
The consolidated financial statements of BNR as of December 31, 1993
and 1992, and for each of the years in the three-year period ended December 31,
1993, have been incorporated by reference herein in reliance upon the report of
Hannis T. Bourgeois & Co., L.L.P., independent auditors, and on the authority
of said firm as experts in accounting and auditing.
The consolidated financial statements of Regions, incorporated by
reference in this Registration Statement, have been audited by Ernst & Young,
independent auditors, for the periods indicated in their report thereon which
is included in the Regions Annual Report to Stockholders and the Annual Report
on Form 10-K for the year ended December 31, 1993. The financial statements
audited by Ernst & Young have been incorporated herein by reference in reliance
on their report given on their authority as experts in accounting and auditing.
OPINIONS
The legality of the shares of Regions Common Stock to be issued in the
Merger will be passed upon by Lange, Simpson, Robinson & Somerville,
Birmingham, Alabama. Henry E. Simpson, partner in the law firm of Lange,
Simpson, Robinson & Somerville, is a member of the Board of Directors of
Regions. As of June 16, 1994, attorneys in the law firm of Lange, Simpson,
Robinson & Somerville owned an aggregate of 120,695 shares of Regions Common
Stock.
Certain tax consequences of the transaction have been passed upon by
Alston & Bird, Atlanta, Georgia.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
BNR BANCSHARES, INC.
AND
FIRST ALABAMA BANCSHARES, INC.
DATED AS OF APRIL 21, 1994
A-1
<PAGE> 56
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-6
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-6
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . A-7
1.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7
1.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . A-7
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7
ARTICLE 2 - TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7
2.1 Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . A-7
2.2 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7
2.3 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
ARTICLE 3 - MANNER OF CONVERTING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
3.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
3.2 Anti-Dilution Provisions . . . . . . . . . . . . . . . . . . . . . . . . . A-8
3.3 Shares Held by BNR or FAB . . . . . . . . . . . . . . . . . . . . . . . . A-9
3.4 Dissenting Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . A-9
3.5 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9
ARTICLE 4 - EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10
4.1 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10
4.2 Rights of Former BNR Shareholders . . . . . . . . . . . . . . . . . . . . A-10
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF BNR . . . . . . . . . . . . . . . . . . . . . A-11
5.1 Organization, Standing, and Power . . . . . . . . . . . . . . . . . . . . A-11
5.2 Authority; No Breach By Agreement . . . . . . . . . . . . . . . . . . . . A-12
5.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-12
5.4 BNR Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13
5.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13
5.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . A-14
5.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . A-14
5.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-14
5.9 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . A-15
5.10 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15
5.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . A-16
5.12 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-18
5.13 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-18
5.14 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . A-18
5.15 Tax and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . A-19
5.16 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19
5.17 Directors' Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . A-20
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF FAB . . . . . . . . . . . . . . . . . . . . . A-20
6.1 Organization, Standing, and Power . . . . . . . . . . . . . . . . . . . . A-20
6.2 Authority; No Breach By Agreement . . . . . . . . . . . . . . . . . . . . A-20
6.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21
6.4 FAB Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21
</TABLE>
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<TABLE>
<S> <C>
6.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22
6.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . A-22
6.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . A-22
6.8 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22
6.9 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
6.10 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
6.11 Tax and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION . . . . . . . . . . . . . . . . . . . . . . . . A-24
7.1 Affirmative Covenants of BNR . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
7.2 Negative Covenants of BNR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
7.3 Covenants of FAB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
7.4 Adverse Changes in Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
7.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28
ARTICLE 8 - ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28
8.1 Registration Statement; Proxy Statement; Shareholder Approval . . . . . . . . . . . A-28
8.2 Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29
8.3 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29
8.4 Filings with State Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-30
8.5 Agreement as to Efforts to Consummate . . . . . . . . . . . . . . . . . . . . . . . A-30
8.6 Investigation and Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . A-30
8.7 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-31
8.8 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-31
8.9 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-31
8.10 Agreements of Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-32
8.11 Employee Benefits and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . A-32
8.12 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-33
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE . . . . . . . . . . . . . . . . . . . . A-34
9.1 Conditions to Obligations of Each Party . . . . . . . . . . . . . . . . . . . . . . A-34
9.2 Conditions to Obligations of FAB . . . . . . . . . . . . . . . . . . . . . . . . . . A-35
9.3 Conditions to Obligations of BNR . . . . . . . . . . . . . . . . . . . . . . . . . . A-36
ARTICLE 10 - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-37
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-37
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-38
10.3 Non-Survival of Representations and Covenants . . . . . . . . . . . . . . . . . . . A-38
ARTICLE 11 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-38
11.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-38
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-46
11.3 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-46
11.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-46
11.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-47
11.6 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-47
11.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-47
11.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-48
11.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-48
</TABLE>
A-3
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<TABLE>
<S> <C> <C>
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . A-48
11.11 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . A-49
11.12 Enforcement of Agreement . . . . . . . . . . . . . . . . . . . A-49
11.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . A-49
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-49
</TABLE>
A-4
<PAGE> 59
LIST OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
1. Form of Directors' Agreement. (Section 5.17).
2. Form of agreement of affiliates of BNR. (Section Section 8.10, 9.2(f)).
3. Matters as to which Stone, Pigman, Walther, Wittmann & Hutchinson will opine. (Section 9.2(d)).
4. Form of Claims Letter (Section 9.2(g)).
5. Matters as to which Lange, Simpson, Robinson & Somerville will opine. (Section 9.3(d)).
</TABLE>
A-5
<PAGE> 60
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
and entered into as of April 21, 1994, by and between BNR BANCSHARES, INC.
("BNR"), a corporation organized and existing under the laws of the State of
Louisiana, with its principal office located in New Roads, Louisiana; and FIRST
ALABAMA BANCSHARES, INC. ("FAB"), a corporation organized and existing under
the laws of the State of Delaware, with its principal office located in
Birmingham, Alabama.
PREAMBLE
The Boards of Directors of BNR and FAB are of the opinion that
the transactions described herein are in the best interests of the parties and
their respective shareholders. This Agreement provides for the acquisition of
BNR by FAB pursuant to the merger of BNR into and with FAB. At the effective
time of such merger, the outstanding shares of the capital stock of BNR shall
be converted into shares of the common stock of FAB (except as provided
herein). As a result, shareholders of BNR shall become shareholders of FAB and
each of the subsidiaries of BNR shall continue to conduct its business and
operations as a wholly owned subsidiary of FAB. The transactions described in
this Agreement are subject to the approvals of the shareholders of BNR, the
Board of Governors of the Federal Reserve System, and the appropriate state
regulatory authorities and the satisfaction of certain other conditions
described in this Agreement. It is the intention of the parties to this
Agreement that the merger for federal income tax purposes shall qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code.
Certain terms used in this Agreement are defined in Section
11.1 of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
A-6
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ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, BNR shall be merged into and with FAB in
accordance with the provisions of Sections 12:111 and 12:112 of the LBCL and
with the effect provided in Section 12:115 of the LBCL and of Section 258 of
the DGCL and with the effect provided in Section 259 of the DGCL (the
"Merger"). FAB shall be the Surviving Corporation of the Merger and shall
continue to be governed by the Laws of the State of Delaware. The Merger shall
be consummated pursuant to the terms of this Agreement, which has been approved
and adopted by the Boards of Directors of BNR and FAB.
1.2 TIME AND PLACE OF CLOSING. The Closing will take
place at 9:00 A.M. on the date that the Effective Time occurs (or the
immediately preceding day if the Effective Time is earlier than 9:00 A.M.), or
at such other time as the Parties, acting through their chief executive
officers or chief financial officers, may mutually agree. The place of Closing
shall be at the offices of FAB, in Birmingham, Alabama, or such other place as
may be mutually agreed upon by the Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions
contemplated by this Agreement shall become effective on the date and at the
time the Louisiana Certificate of Merger reflecting the Merger shall become
effective with the Secretary of State of the State of Louisiana and the
Delaware Certificate of Merger reflecting the Merger shall become effective
with the Secretary of State of the State of Delaware (the "Effective Time").
Subject to the terms and conditions hereof, unless otherwise mutually agreed
upon in writing by the chief executive officers or chief financial officers of
each Party, the Parties shall use their reasonable efforts to cause the
Effective Time to occur on the last day of the month in which occurs the last
to occur of (i) the effective date (including expiration of any applicable
waiting period) of the last required Consent of any Regulatory Authority having
authority over and approving or exempting the Merger, and (ii) the date on
which the shareholders of BNR approve this Agreement to the extent such
approval is required by applicable Law; or such later date within 30 days
thereof as may be specified by FAB.
ARTICLE 2
TERMS OF MERGER
2.1 CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of FAB in effect immediately prior to the Effective Time shall be
the Certificate of Incorporation of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of FAB in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
after the Effective Time until otherwise amended or repealed.
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2.3 DIRECTORS AND OFFICERS. The directors of FAB in
office immediately prior to the Effective Time, together with such additional
persons as may thereafter be elected, shall serve as the directors of the
Surviving Corporation from and after the Effective Time in accordance with the
Bylaws of the Surviving Corporation. The officers of FAB in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the officers of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the
Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of
this Article 3, at the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof, the shares of the constituent
corporations shall be converted as follows:
(a) Each share of FAB Common Stock issued and
outstanding immediately prior to the Effective Time shall remain
issued and outstanding from and after the Effective Time.
(b) Each share of BNR Common Stock (excluding
shares held by BNR or any of its Subsidiaries or by FAB or any of its
Subsidiaries, in each case other than in a fiduciary capacity or as a
result of debts previously contracted, and excluding shares held by
shareholders who perfect their dissenters' rights of appraisal as
provided in Section 3.4 of this Agreement) issued and outstanding at
the Effective Time shall be converted into and exchanged for that
number of shares of FAB Common Stock (the "Exchange Ratio") equal to
the quotient obtained by dividing (i) $79.70 by (ii) the Average
Closing Price; provided, however, that in the event the Average
Closing Price is (a) less than $26.00, the Exchange Ratio shall be
3.065, or (b) greater than $36.00, the Exchange Ratio shall be 2.214
($26.00 and $36.00 are collectively referred to as the "Average
Closing Price Limitations").
3.2 ANTI-DILUTION PROVISIONS. In the event BNR changes
the number of shares of BNR Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date therefor (in
the case of a stock dividend) or the effective date thereof (in the case of a
stock split or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted. In the event FAB changes the number of shares of FAB
Common Stock issued and outstanding prior to the Effective Time as a result of
a stock split, stock dividend, or similar recapitalization with respect to such
stock and the record date therefor (in the case of a stock dividend) or the
effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Exchange Ratio shall be proportionately adjusted.
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3.3 SHARES HELD BY BNR OR FAB. Each of the shares of BNR
Common Stock held by any BNR Company or by any FAB Company, in each case other
than in a fiduciary capacity or as a result of debts previously contracted,
shall be canceled and retired at the Effective Time and no consideration shall
be issued in exchange therefor.
3.4 DISSENTING SHAREHOLDERS. Any holder of shares of BNR
Common Stock who perfects such holder's dissenters' rights of appraisal in
accordance with and as contemplated by Part XIII of the LBCL shall be entitled
to receive the value of such shares in cash as determined pursuant to such
provision of Law; provided, that no such payment shall be made to any
dissenting shareholder unless and until such dissenting shareholder has
complied with the applicable provisions of the LBCL, including the provisions
of Section 131 thereof relating to the deposit in escrow, endorsement, and
transfer of the certificate or certificates representing the shares for which
payment is being made. In the event that a dissenting shareholder of BNR fails
to perfect, or effectively withdraws or loses, his right to appraisal and of
payment for his shares, such Person shall not have the right to receive payment
in cash for his shares and, instead, as of the Effective Time the shares of BNR
Common Stock held by such Person shall be converted into and exchanged for that
number of shares of FAB Common Stock determined under Section 3.1 of this
Agreement and the delivery of certificates representing such FAB Common Stock
and any dividends or other distributions in respect thereof to which such
holder may be entitled shall be governed by Section 4.1 of this Agreement.
3.5 FRACTIONAL SHARES. Notwithstanding any other
provision of this Agreement, each holder of shares of BNR Common Stock
exchanged pursuant to the Merger, who would otherwise have been entitled to
receive a fraction of a share of FAB Common Stock (after taking into account
all certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of FAB
Common Stock multiplied by the market value of one share of FAB Common Stock at
the Effective Time. The market value of one share of FAB Common Stock at the
Effective Time shall be the Average Closing Price, subject, however, to the
Average Closing Price Limitations. No such holder will be entitled to
dividends, voting rights, or any other rights as a shareholder in respect of
any fractional shares.
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ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective
Time, FAB and BNR shall cause the exchange agent selected by FAB (the "Exchange
Agent") to mail to the former shareholders of BNR appropriate transmittal
materials (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates theretofore representing shares of BNR
Common Stock shall pass, only upon proper delivery of such certificates to the
Exchange Agent). After the Effective Time, each holder of shares of BNR Common
Stock (other than shares to be canceled pursuant to Section 3.3 of this
Agreement or as to which dissenters' rights of appraisal have been perfected
and not withdrawn or forfeited under Section 131 of the LBCL) issued and
outstanding at the Effective Time, promptly upon the surrender of the
certificate or certificates representing such shares to the Exchange Agent,
shall receive in exchange therefor the certificate or certificates representing
the shares of FAB Common Stock into which such shares of BNR Common Stock have
been converted under Section 3.1 of this Agreement, together with all
undelivered dividends and other distributions in respect of such shares
(without interest thereon) pursuant to Section 4.2 of this Agreement and, to
the extent required by Section 3.5 of this Agreement, cash in lieu of any
fractional share of FAB Common Stock to which such holder otherwise would be
entitled (without interest). Until so surrendered, each outstanding
certificate of BNR Common Stock shall be deemed for all purposes, other than as
provided below with respect to the payment of dividends or other distributions
payable to the holders of shares of FAB Common Stock, to represent the number
of whole shares of FAB Common Stock into which the number of shares of BNR
Common Stock represented thereby prior to the Effective Time shall have been
converted. FAB shall not be obligated to deliver the certificate or
certificates representing the shares of FAB Common Stock to which any former
holder of BNR Common Stock is entitled as a result of the Merger, or any
dividends or distributions in respect of those shares, until such holder
surrenders his certificate or certificates representing the shares of BNR
Common Stock for exchange as provided in this Section 4.1 or otherwise complies
with the procedures of the Exchange Agent with respect to lost, stolen, or
destroyed certificates.. The certificate or certificates of BNR Common Stock
so surrendered shall be duly endorsed as the Exchange Agent may require. Any
other provision of this Agreement notwithstanding, neither FAB, BNR, nor the
Exchange Agent shall be liable to a holder of BNR Common Stock for any amounts
paid or property delivered in good faith to a public official pursuant to any
applicable abandoned property Law.
4.2 RIGHTS OF FORMER BNR SHAREHOLDERS. At the Effective
Time, the stock transfer books of BNR shall be closed as to holders of BNR
Common Stock immediately prior to the Effective Time and no transfer of BNR
Common Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1 of
this Agreement, each certificate theretofore representing shares of BNR Common
Stock (other than shares to be canceled pursuant to Sections 3.3 and 3.4 of
this Agreement) shall from and after the Effective Time represent for all
purposes the number of shares of FAB Common Stock into which the shares of BNR
Common Stock represented thereby shall have been converted under Section 3.1 of
this Agreement and the cash issuable in lieu of fractional
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shares under Section 3.5 of this Agreement. To the extent permitted by Law,
former shareholders of record of BNR shall be entitled to vote after the
Effective Time at any meeting of FAB shareholders the number of whole shares of
FAB Common Stock into which their respective shares of BNR Common Stock are
converted, regardless of whether such holders have exchanged their certificates
representing BNR Common Stock for certificates representing FAB Common Stock in
accordance with the provisions of this Agreement. Whenever a dividend or other
distribution is declared by FAB on the FAB Common Stock, the record date for
which is at or after the Effective Time, the declaration shall include
dividends or other distributions on all shares issuable pursuant to this
Agreement, but no dividend or other distribution payable to the holders of
record of FAB Common Stock as of any time subsequent to the Effective Time
shall be delivered to the holder of any certificate representing shares of BNR
Common Stock issued and outstanding at the Effective Time until such holder
surrenders such certificate for exchange as provided in Section 4.1 of this
Agreement. However, upon surrender of such BNR Common Stock certificate, both
the FAB Common Stock certificate (together with all such undelivered dividends
or other distributions without interest) and any undelivered cash payments to
be paid for fractional share interests (without interest) shall be delivered
and paid with respect to each share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BNR
BNR hereby represents and warrants to FAB as follows:
5.1 ORGANIZATION, STANDING, AND POWER. BNR is a
corporation duly organized and validly existing, and in good standing under the
Laws of the State of Louisiana, and has the corporate power and authority to
carry on its business as now conducted and to own, lease, and operate its
material Assets. BNR is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on BNR.
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5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) BNR has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of BNR, subject to the approval of this Agreement by the required vote of
the outstanding BNR Common Stock, which is the only shareholder vote required
for approval of this Agreement and consummation of the Merger by BNR. Subject
to such requisite shareholder approval, this Agreement represents a legal,
valid, and binding obligation of BNR, enforceable against BNR in accordance
with its terms (except in all cases as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, or similar
Laws affecting the enforcement of creditors' rights generally and (ii)
application of, and limitations on the application of, equitable principles and
remedies, including limitations on the availability of the equitable remedy of
specific performance or injunctive relief.
(b) Neither the execution and delivery of this
Agreement by BNR, nor the consummation by BNR of the transactions contemplated
hereby, nor compliance by BNR with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of BNR's Articles of
Incorporation or Bylaws, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any BNR Company under, any Contract or Permit of any BNR Company,
where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on BNR, or, (iii) subject to receipt of the requisite approvals referred
to in Section 9.1(b) of this Agreement, violate any Law or Order applicable to
any BNR Company or any of their respective material Assets.
(c) Other than in connection or compliance with
the provisions of the Securities Laws, applicable state corporate and
securities Laws, and rules of the NYSE and the NASD, and other than Consents
required from Regulatory Authorities, and other than notices to or filings with
the Internal Revenue Service or the Pension Benefit Guaranty Corporation or
both with respect to any employee benefit plans, or under the HSR Act, and
other than Consents, filings, or notifications which, if not obtained or made,
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on BNR, no notice to, filing with, or Consent of, any public
body or authority is necessary for the consummation by BNR of the Merger and
the other transactions contemplated in this Agreement.
5.3 CAPITAL STOCK. The authorized capital stock of BNR
consists of 5,000,000 shares of BNR Common Stock, of which 326,218 shares are
issued and outstanding as of the date of this Agreement and not more than
326,218 shares will be issued and outstanding at the Effective Time. All of
the issued and outstanding shares of capital stock of BNR are duly and validly
issued and outstanding and are fully paid and nonassessable under the LBCL. To
the Knowledge of BNR, none of the outstanding shares of capital stock of BNR
has been issued in
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violation of any preemptive rights of the current or past shareholders of BNR.
Except as set forth above or as disclosed in Section 5.3 of the BNR Disclosure
Memorandum, there are no shares of capital stock or other equity securities of
BNR outstanding and no outstanding Rights relating to the capital stock of BNR.
5.4 BNR SUBSIDIARIES. BNR has disclosed in Section 5.4
of the BNR Disclosure Memorandum all of the BNR Subsidiaries as of the date of
this Agreement. Except as disclosed in Section 5.4 of the BNR Disclosure
Memorandum, BNR or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock of each BNR Subsidiary. No equity
securities of any BNR Subsidiary are or may become required to be issued (other
than to another BNR Company) by reason of any Rights, and there are no
Contracts by which any BNR Subsidiary is bound to issue (other than to another
BNR Company) additional shares of its capital stock or Rights or by which any
BNR Company is or may be bound to transfer any shares of the capital stock of
any BNR Subsidiary (other than to another BNR Company). There are no Contracts
relating to the rights of any BNR Company to vote or to dispose of any shares
of the capital stock of any BNR Subsidiary. All of the shares of capital stock
of each BNR Subsidiary held by a BNR Company are fully paid and (except
pursuant to 12 USC Section 55 in the case of national banks and comparable,
applicable state Law, if any, in the case of state depository institutions)
nonassessable under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the BNR Company
free and clear of any Lien. Each BNR Subsidiary is either a bank, a savings
association, or a corporation, and is duly organized, validly existing, and (as
to corporations) in good standing under the Laws of the jurisdiction in which
it is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease, and operate its Assets and to carry on its
business as now conducted. Each BNR Subsidiary is duly qualified or licensed
to transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets
or the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on BNR. Each BNR Subsidiary that is a depository
institution is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder, and the deposits in which
are insured by the Bank Insurance Fund or the Savings Association Insurance
Fund, as appropriate, to the extent provided by applicable law.
5.5 FINANCIAL STATEMENTS. BNR has included in Section
5.5 of the BNR Disclosure Memorandum copies of all BNR Financial Statements
for periods ended prior to the date hereof and will deliver to FAB copies of
all BNR Financial Statements prepared subsequent to the date hereof. The BNR
Financial Statements (as of the dates thereof and for the periods covered
thereby) present or will present, as the case may be, fairly the consolidated
financial position of the BNR Companies as of the dates indicated and the
consolidated results of operations, changes in stockholders' equity, and cash
flows of the BNR Companies for the periods indicated, in accordance with GAAP
(subject to any exceptions as to consistency specified therein or as may be
indicated in the notes thereto or, in the case of interim financial statements,
to normal recurring year-end adjustments that are not material in amount of
effect and to the absence from
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interim financial statements of any footnote disclosures).
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as
disclosed in Section 5.6 of the BNR Disclosure Memorandum, no BNR Company has
any Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on BNR, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of BNR as of
December 31, 1993 included in the BNR Financial Statements or reflected in the
notes thereto. Except as disclosed in Section 5.6 of the BNR Disclosure
Memorandum, no BNR Company has incurred or paid any Liability since December
31, 1993, except for such Liabilities incurred or paid in the ordinary course
of business consistent with past business practice and which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
BNR.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December
31, 1993, except as disclosed in Section 5.7 of the BNR Disclosure Memorandum,
or in the BNR Financial Statements delivered prior to the date of this
Agreement, to the Knowledge of BNR,(i) there have been no events, changes, or
occurrences which have had, or are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on BNR, and (ii) the BNR Companies
have not taken any action, or failed to take any action, prior to the date of
this Agreement, which action or failure, if taken after the date of this
Agreement, would represent or result in a material breach or violation of any
of the covenants and agreements of BNR provided in Article 7 of this Agreement.
5.8 TAX MATTERS.
(a) All Tax returns required to be filed by or on
behalf of any of the BNR Companies have been timely filed or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before December 31, 1993, and on or before the date of the most
recent fiscal year end immediately preceding the Effective Time, except to the
extent that all such failures to file or untimely filings, individually or in
the aggregate, are not reasonably likely to have a Material Adverse Effect on
BNR and all returns filed are complete and accurate in all material respects to
the Knowledge of BNR. All Taxes shown on filed returns have been paid. There
is no audit examination, deficiency, refund Litigation, or penalties due or
owed with respect to any Taxes that is reasonably and likely to result in a
determination that would have a Material Adverse Effect on BNR, except as
reserved against in the BNR Financial Statements delivered prior to the date of
this Agreement or as disclosed in Section 5.8 of the BNR Disclosure Memorandum.
All Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
(b) None of the BNR Companies has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service or other applicable
taxing authorities) that is currently in effect.
(c) To the Knowledge of BNR, adequate provision
for any Taxes due or to
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become due for any of the BNR Companies for the period or periods through and
including the date of the respective BNR Financial Statements has been made and
is reflected on such BNR Financial Statements.
(d) Effective for the fiscal year ended December
31, 1993, BNR adopted Financial Accounting Standards Board Statement 109,
"Accounting for Income Taxes."
(e) Each of the BNR Companies is in compliance
with, and its records contain the information and documents (including properly
completed IRS Forms W-9) necessary to comply with, in all material respects,
applicable information reporting and Tax withholding requirements under
federal, state, and local Tax Laws, and such records identify the accounts
subject to backup withholding under Section 3406 of the Internal Revenue Code.
5.9 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of BNR, each BNR Company,
its Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for such instances of
non-compliance that are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on BNR.
(b) To the Knowledge of BNR, there is no
Litigation pending or threatened before any court, governmental agency, or
authority or other forum in which any BNR Company or any of its Loan Properties
or Participation Facilities has been or, with respect to threatened Litigation,
may be named as a defendant or potentially responsible party (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material, whether
or not occurring at, on, under, or involving a site owned, leased, or operated
by any BNR Company or any of its Loan Properties or Participation Facilities,
except for such Litigation pending or threatened that is not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on BNR,
and to the Knowledge of BNR, there is no reasonable basis for any such
Litigation.
(c) To the Knowledge of BNR, there have been no
releases in violation of Environmental Laws of Hazardous Material in, on,
under, or affecting any Participation Facility, or Loan Property, except such
as are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on BNR.
5.10 COMPLIANCE WITH LAWS. BNR is duly registered as a
bank holding company under the BHC Act. Each BNR Company has in effect all
Permits necessary for it to own, lease, or operate its material Assets and to
carry on its business as now conducted, and there has occurred no Default under
any such Permit other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BNR. Except as
disclosed in Section 5.10 of the BNR Disclosure Memorandum, none of the BNR
Companies:
(a) is in violation of any Laws, Orders, or
Permits applicable to its business
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or employees conducting its business, except for violations which are
not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on BNR; and
(b) has received any notification or
communication from any agency or department of federal, state, or
local government or any Regulatory Authority or the staff thereof (i)
asserting that any BNR Company is not in compliance with any of the
Laws or Orders which such governmental authority or Regulatory
Authority enforces, where such noncompliance is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on
BNR, (ii) threatening to revoke any Permits, or (iii) requiring any
BNR Company to enter into or consent to the issuance of a cease and
desist order, formal agreement, directive, commitment, or memorandum
of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business,
or in any manner relates to its capital adequacy, its credit or
reserve policies, its management, or the payment of dividends.
5.11 EMPLOYEE BENEFIT PLANS.
(a) BNR has disclosed in Section 5.11 of the BNR
Disclosure Memorandum, and has delivered or made available to FAB prior to the
execution of this Agreement copies in each case of, all written pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plan, all other
written employee programs, arrangements, or agreements, all medical, vision,
dental, or other written health plans, all life insurance plans, and all other
written employee benefit plans or fringe benefit plans, including written
"employee benefit plans" as that term is defined in Section 3(3) of ERISA,
currently adopted, maintained by, sponsored in whole or in part by, or
contributed to, by any BNR Company or Affiliate thereof for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors,
or other beneficiaries and under which employees, retirees, dependents,
spouses, directors, independent contractors, or other beneficiaries are
eligible to participate (collectively, the "BNR Benefit Plans"). Any of the
BNR Benefit Plans which is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, is referred to herein as a "BNR ERISA Plan."
Each BNR ERISA Plan which is also a "defined benefit plan" (as defined in
Section 414(j) of the Internal Revenue Code) is referred to herein as a "BNR
Pension Plan." No BNR Pension Plan is or has been a multiemployer plan within
the meaning of Section 3(37) of ERISA.
(b) To the Knowledge of BNR, all BNR Benefit
Plans are in compliance with the applicable terms of ERISA, the Internal
Revenue Code, and any other applicable Laws the breach or violation of which
are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on BNR. Except as disclosed in Section 5.11(b) of the BNR
Disclosure Memorandum, each BNR ERISA Plan which is intended to be qualified
under Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and BNR is not aware of
any circumstances likely to result in revocation of any such favorable
determination letter. To the Knowledge of BNR, no BNR Company has engaged in a
transaction with respect to any BNR Benefit Plan that, assuming the taxable
period
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of such transaction expired as of the date hereof, would subject any BNR
Company to a tax or penalty imposed by either Section 4975 of the Internal
Revenue Code or Section 502(i) of ERISA that, individually or in the aggregate,
is reasonably likely to have a Material Adverse Effect on BNR.
(c) No BNR Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the
fair market value of the assets of any such plan equals or exceeds the plan's
"benefit liabilities," as that term is defined in Section 4001(a)(16) of ERISA,
when determined under actuarial factors that would apply if the plan terminated
in accordance with all applicable legal requirements. Since the date of the
most recent actuarial valuation, there has been (i) no material change in the
financial position of any BNR Pension Plan, (ii) no change in the actuarial
assumptions with respect to any BNR Pension Plan, and (iii) no increase in
benefits under any BNR Pension Plan as a result of plan amendments or changes
in applicable Law which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on BNR or materially adversely affect the
funding status of any such plan. Neither any BNR Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any BNR Company, or the single-employer
plan of any entity which is considered one employer with BNR under Section 4001
of ERISA or Section 414 of the Internal Revenue Code or Section 302 of ERISA
(whether or not waived) (an "ERISA Affiliate") has an "accumulated funding
deficiency" within the meaning of Section 412 of the Internal Revenue Code or
Section 302 of ERISA. No BNR Company has provided, or is required to provide,
security to a BNR Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code.
(d) No Liability under Subtitle C or D of Title
IV of ERISA has been or is expected to be incurred by any BNR Company with
respect to any ongoing, frozen, or terminated single-employer plan or the
single-employer plan of any ERISA Affiliate. No BNR Company has incurred any
withdrawal Liability with respect to a multiemployer plan under Subtitle B of
Title IV of ERISA (regardless of whether based on contributions of an ERISA
Affiliate). No notice of a "reportable event," within the meaning of Section
4043 of ERISA for which the 30-day reporting requirement has not been waived,
has been required to be filed for any BNR Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof.
(e) Except as disclosed in Section 5.11 of the
BNR Disclosure Memorandum, no BNR Company has any Liability for retiree health
and life benefits under any of the BNR Benefit Plans and, to the Knowledge of
BNR, there are no restrictions on the rights of such BNR Company to amend or
terminate any such Plan without incurring any Liability thereunder.
(f) Except as disclosed in Section 5.11 of the
BNR Disclosure Memorandum, neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (i) result in
any payment (including severance, unemployment compensation, golden parachute,
or otherwise) becoming due to any director or any employee of any BNR Company
from any BNR Company under any BNR Benefit Plan or otherwise,
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(ii) increase any benefits otherwise payable under any BNR Benefit Plan, or
(iii) result in any acceleration of the time of payment or vesting of any such
benefit.
(g) The actuarial present values of all accrued
deferred compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees
and former employees of any BNR Company and their respective beneficiaries,
other than entitlements accrued pursuant to funded retirement plans subject to
the provisions of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, have been fully reflected on the BNR Financial Statements to the extent
required by and in accordance with GAAP.
5.12 MATERIAL CONTRACTS. Except as disclosed in Section
5.12 of the BNR Disclosure Memorandum or otherwise reflected in the BNR
Financial Statements, none of the BNR Companies, nor any of their respective
Assets, businesses, or operations, is a party to, or is bound or affected by,
or receives benefits under, (i) any employment, severance, termination,
consulting, or retirement Contract providing for aggregate payments to any
Person in any calendar year in excess of $50,000, (ii) any Contract relating to
the borrowing of money by any BNR Company or the guarantee by any BNR Company
of any such obligation (other than Contracts evidencing deposit liabilities,
purchases of federal funds, fully-secured repurchase agreements, and Federal
Home Loan Bank advances of depository institution Subsidiaries, trade payables,
and Contracts relating to borrowings or guarantees made in the ordinary course
of business), (iii) any Contracts between or among BNR Companies, and (iv) any
other Contract or amendment thereto that would be required to be filed as an
exhibit to a Form 10-K filed by BNR with the SEC as of the date of this
Agreement that has not been filed as an exhibit to BNR's Form 10-K filed for
the fiscal year ended December 31, 1993 (together with all Contracts referred
to in Section 5.11(a) of this Agreement, the "BNR Contracts"). None of the BNR
Companies is in Default under any BNR Contract where such Default, individually
or in the aggregate, is reasonably likely to have a Material Adverse Effect on
BNR. All of the indebtedness of any BNR Company for money borrowed is
prepayable at any time by such BNR Company without penalty or premium.
5.13 LEGAL PROCEEDINGS. Except as disclosed in Section
5.13 of the BNR Disclosure Memorandum, there is no Litigation instituted or
pending, or, to the Knowledge of BNR, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any BNR Company, or against any
Asset, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BNR, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any BNR Company that is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on BNR.
Section 5.13 of the BNR Disclosure Memorandum includes a summary report of all
Litigation as of the date of this Agreement to which any BNR Company is a party
and which names a BNR Company as a defendant or cross-defendant.
5.14 STATEMENTS TRUE AND CORRECT. As of their respective
dates, each report and
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other document, including financial statements, exhibits, and schedules
thereto, filed by a BNR Company with any Regulatory Authority complied in all
material respects with all applicable Laws, and as of its respective date, each
such report and document did not, in all material respects, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading. No statement,
certificate, instrument, or other writing furnished or to be furnished by any
BNR Company or any Affiliate thereof to FAB pursuant to this Agreement or any
other document, agreement, or instrument referred to herein contains or will
contain any untrue statement of material fact or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of the information supplied
or to be supplied by any BNR Company or any Affiliate thereof for inclusion in
the Registration Statement to be filed by FAB with the SEC will, when the
Registration Statement becomes effective, be false or misleading with respect
to any material fact, or contain any untrue statement of a material fact, or
omit to state any material fact required to be stated thereunder or necessary
to make the statements therein not misleading. None of the information
supplied or to be supplied by any BNR Company or any Affiliate thereof for
inclusion in the Proxy Statement to be mailed to BNR shareholders in connection
with the Shareholders' Meeting, and any other documents to be filed by a BNR
Company or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to the Proxy
Statement, when first mailed to the shareholders of BNR, be false or misleading
with respect to any material fact, or contain any misstatement of material
fact, or omit to state any material fact required to be stated thereunder or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of the Shareholders'
Meeting, be false or misleading with respect to any material fact, or omit to
state any material fact required to be stated thereunder or necessary to
correct any material statement in any earlier communication with respect to the
solicitation of any proxy for the Shareholders' Meeting. All documents that
any BNR Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
5.15 TAX AND REGULATORY MATTERS. No BNR Company or any
Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
materially impede receipt of any Consents of Regulatory Authorities referred to
in Section 9.1(b) of this Agreement or result in the imposition of a condition
or restriction of the type referred to in the last sentence of such Section.
5.16 STATE TAKEOVER LAWS. To the extent applicable, each
BNR Company has taken all necessary action to exempt the transactions
contemplated by this Agreement from Sections 132 et. seq. and 135 et. seq. of
the LBCL and any comparable provisions of the Articles of
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Incorporation of BNR.
5.17 DIRECTORS' AGREEMENTS. Each of the directors of BNR
has executed and delivered to FAB an agreement in substantially the form of
Exhibit 1.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF FAB
FAB hereby represents and warrants to BNR as follows:
6.1 ORGANIZATION, STANDING, AND POWER. FAB is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of Delaware, and has the corporate power and authority to
carry on its business as now conducted and to own, lease, and operate its
material Assets. FAB is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FAB.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) FAB has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of FAB. This Agreement represents a legal, valid, and binding obligation
of FAB, enforceable against FAB in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this
Agreement by FAB, nor the consummation by FAB of the transactions contemplated
hereby, nor compliance by FAB with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of FAB's Certificate of
Incorporation or Bylaws, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any FAB Company under, any Contract or Permit of any FAB Company,
where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FAB, or, (iii) subject to receipt of the requisite approvals referred
to in Section 9.1(b) of this Agreement, violate any Law or Order applicable to
any FAB Company or any of their respective material Assets.
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(c) Other than in connection or compliance with
the provisions of the Securities Laws, applicable state corporate and
securities Laws, and rules of the NYSE and the NASD, and other than Consents
required from Regulatory Authorities, and other than notices to or filings with
the Internal Revenue Service or the Pension Benefit Guaranty Corporation, or
both, with respect to any employee benefit plans, or under the HSR Act, and
other than Consents, filings, or notifications which, if not obtained or made,
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FAB, no notice to, filing with, or Consent of, any public
body or authority is necessary for the consummation by FAB of the Merger and
the other transactions contemplated in this Agreement.
6.3 CAPITAL STOCK. The authorized capital stock of FAB
consists of 60,000,000 shares of FAB Common Stock, of which 41,049,325 shares
were issued and outstanding and 1,470,700 shares were held as treasury shares
as of December 31, 1993. All of the issued and outstanding shares of FAB
Common Stock are, and all of the shares of FAB Common Stock to be issued in
exchange for shares of BNR Common Stock upon consummation of the Merger, when
issued in accordance with the terms of this Agreement, will be, duly and
validly issued and outstanding, and fully paid and nonassessable under the
DGCL. None of the outstanding shares of FAB Common Stock has been, and none of
the shares of FAB Common Stock to be issued in exchange for shares of BNR
Common Stock upon consummation of the Merger will be, issued in violation of
any preemptive rights of the current or past shareholders of FAB.
6.4 FAB SUBSIDIARIES. FAB has disclosed in Exhibit
21 of its Annual Report on Form 10-K for the fiscal year ended December 31,
1993, all of the material FAB Subsidiaries as of the date of such report.
Except as disclosed in such report, FAB or one of its Subsidiaries, owns all of
the issued and outstanding shares of capital stock of each material FAB
Subsidiary. All of the shares of capital stock of each material FAB Subsidiary
held by a FAB Company are fully paid and (except pursuant to 12 USC Section 55
in the case of national banks and comparable, applicable state Law, if any, in
the case of state depository institutions) nonassessable under the applicable
corporation Law of the jurisdiction in which such Subsidiary is incorporated or
organized and are owned by the FAB Company free and clear of any Lien. Each
material FAB Subsidiary is either a bank, a savings association, or a
corporation, and is duly organized, validly existing, and (as to corporations)
in good standing under the Laws of the jurisdiction in which it is incorporated
or organized, and has the corporate power and authority necessary for it to
own, lease, and operate its Assets and to carry on its business as now
conducted. Each material FAB Subsidiary is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets
or the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on FAB. Each material FAB Subsidiary that is a
depository institution is an "insured institution" as defined in the Federal
Deposit Insurance Act and applicable regulations thereunder, and the deposits
in which are insured by the Bank Insurance Fund or the Savings Association
Insurance Fund, as appropriate, to the extent provided by applicable law.
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6.5 FINANCIAL STATEMENTS. FAB has included in Section
6.53 of the FAB Disclosure Memorandum all FAB Financial Statements for periods
ended prior to the date hereof and will deliver to BNR copies of all FAB
Financial Statements prepared subsequent to the date hereof. The FAB Financial
Statements (as of the dates thereof and for the periods covered thereby)
present or will present, as the case may be, fairly the consolidated financial
position of the FAB Companies as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows of the
FAB Companies for the periods indicated, in accordance with GAAP (subject to
exceptions as to consistency specified therein or as may be indicated in the
notes thereto or, in the case of interim financial statements, to normal
recurring year-end adjustments that are not material in amount or effect and to
the absence from interim financial statements of complete footnote
disclosures).
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. No FAB Company
has any Liabilities (including Liabilities relating to matters contemplated by
Sections 5.8, 5.9, and 5.11 of this Agreement assuming for purposes of this
Section 6.6 that such Sections apply to FAB that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FAB, except
Liabilities which are accrued or reserved against in the consolidated balance
sheets of FAB as of December 31, 1993, included in the FAB Financial Statements
or reflected in the notes thereto. No FAB Company has incurred or paid any
Liability since December 31, 1993, except for such Liabilities incurred or paid
in the ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on FAB.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December
31, 1993, except as disclosed in the FAB Financial Statements delivered prior
to the date of this Agreement, (i) there have been no events, changes, or
occurrences which have had, or are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on FAB, and (ii) the FAB Companies
have not taken any action, or failed to take any action, prior to the date of
this Agreement, which action or failure, if taken after the date of this
Agreement would represent or result in a material breach or violation of any of
the covenants and agreements of FAB provided in Article 7 of this Agreement.
6.8 COMPLIANCE WITH LAWS. FAB is duly registered as a
bank holding company under the BHC Act. Each FAB Company has in effect all
Permits necessary for it to own, lease, or operate its material Assets and to
carry on its business as now conducted, and there has occurred no Default under
any such Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FAB. No FAB
Company:
(a) is in violation of any Laws, Orders, or
Permits applicable to its business or employees conducting its
business, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on
FAB; and
(b) has received any notification or
communication from any agency or
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department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any FAB Company is
not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FAB, (ii) threatening to
revoke any Permits, or (iii) requiring any FAB Company to enter into
or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment or memorandum of understanding, or to
adopt any Board resolution or similar undertaking, which restricts
materially the conduct of its business, or in any manner relates to
its capital adequacy, its credit or reserve policies, its management,
or the payment of dividends.
6.9 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of FAB, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any FAB Company, or against any
Asset, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FAB, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any FAB Company, that is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on FAB.
6.10 STATEMENTS TRUE AND CORRECT. As of their respective dates,
each report and other document, including financial statements, exhibits, and
schedules thereto, filed by a FAB Company with any Regulatory Authority
complied in all material respects with all applicable Laws, and as of its
respective date, each such report and document did not, in all material
respects, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. No statement, certificate, instrument, or other writing furnished
or to be furnished by any FAB Company or any Affiliate thereof to BNR pursuant
to this Agreement or any other document, agreement, or instrument referred to
herein contains or will contain any untrue statement of material fact or will
omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. None of
the information supplied or to be supplied by any FAB Company or any Affiliate
thereof for inclusion in the Registration Statement to be filed by FAB with the
SEC, will, when the Registration Statement becomes effective, be false or
misleading with respect to any material fact, or contain any untrue statement
of a material fact, or omit to state any material fact required to be stated
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thereunder or necessary to make the statements therein not misleading. None of
the information supplied or to be supplied by any FAB Company or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to BNR shareholders
in connection with the Shareholders' Meeting, and any other documents to be
filed by any FAB Company or any Affiliate thereof with the SEC or any other
Regulatory Authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and with respect to the
Proxy Statement, when first mailed to the shareholders of BNR, be false or
misleading with respect to any material fact, or contain any misstatement of a
material fact or, omit to state any material fact required to be stated
thereunder or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or, in the case of
the Proxy Statement, or any amendment thereof or supplement thereto, at the
time of the Shareholders' Meeting, be false or misleading with respect to any
material fact, or omit to state any material fact required to be stated
thereunder or necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the Shareholders' Meeting.
All documents that any FAB Company or any Affiliate thereof is responsible for
filing with any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
provisions of applicable Law.
6.11 TAX AND REGULATORY MATTERS. No FAB Company or any Affiliate
thereof has taken any action or has any Knowledge of any fact or circumstance
that is reasonably likely to (i) prevent the transactions contemplated hereby,
including the Merger, from qualifying as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, or (ii) materially impede receipt
of any Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement or result in the imposition of a condition or restriction of the type
referred to in the last sentence of such Section.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF BNR. Unless the prior written
consent of the chief executive officer, appropriate regional president, or
chief financial officer of FAB shall have been obtained, and except as
otherwise expressly contemplated herein or disclosed in Section 7.1 of the BNR
Disclosure Memorandum, BNR shall and shall cause each of its Subsidiaries to,
from the date of this Agreement until the Effective Time or termination of this
Agreement, (i) operate its business only in the usual, regular, and ordinary
course, (ii) preserve intact in all material respects its business organization
and Assets and maintain its rights and franchises, and (iii) take no action
which would (x) materially adversely affect the ability of any Party to obtain
any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentences of Section 9.1(b) or 9.1(c) of this Agreement, or (y) materially
adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement.
7.2 NEGATIVE COVENANTS OF BNR. Except as disclosed in Section
7.2 of the BNR Disclosure Memorandum for the applicable paragraphs indicated
below, from the date of this Agreement until the earlier of the Effective Time
or the termination of this Agreement, BNR covenants and agrees that it will not
do or agree or commit to do, or permit any of its Subsidiaries to do or agree
or commit to do, any of the following without the prior written consent of the
chief executive officer, appropriate regional president, or chief financial
officer of FAB, which consent shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws, or other
governing
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instruments of any BNR Company; or
(b) incur any additional debt obligation or other
obligation for borrowed money (other than indebtedness of a BNR Company
to another BNR Company) in excess of an aggregate amount outstanding at
any time of $150,000 (for the BNR Companies on a consolidated basis)
except in the ordinary course of the business of BNR Subsidiaries
consistent with past practices (which shall include, for BNR Subsidiaries
that are depository institutions, creation of deposit liabilities,
purchases of federal funds, advances from the Federal Reserve Bank or
Federal Home Loan Bank, whether or not such BNR Subsidiaries have
previously received any such advances, overnight borrowings to meet
temporary liquidity needs, and entry into repurchase agreements fully
secured by U.S. Government or agency securities), or impose, or suffer
the imposition, on any Asset of any BNR Company of any Lien or permit any
such Lien to exist (other than in connection with deposits, repurchase
agreements, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business, the satisfaction of legal
requirements in the exercise of trust powers, Liens to secure debt
obligations or other obligations for borrowed money permitted under this
paragraph (b), and Liens in effect as of the date hereof that are
disclosed in the BNR Disclosure Memorandum); it being understood that
Bank of New Roads has not previously but may in the future, borrow funds
from the Federal Home Loan Bank to be secured by Liens and such
borrowings and Liens are expressly permitted under this paragraph (b); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit
plans), directly or indirectly, any shares, or any securities convertible
into any shares, of the capital stock of any BNR Company, or declare or
pay any dividend or make any other distribution in respect of BNR's
capital stock, provided that BNR may (to the extent legally and
contractually permitted to do so), but shall not be obligated to, declare
and pay a cash dividend on each issued and outstanding share of BNR
Common Stock for each fiscal year (or portion thereof) occurring prior to
the Effective Time at a rate not in excess of an amount equal to the
product of (i) a cash dividend amount paid per share on BNR Common Stock
during the 1993 fiscal year and (ii) the quotient obtained by dividing
(x) the number of complete calendar months elapsed during the fiscal year
for which the dividend is being paid prior to the Effective Time and (y)
12; or
(d) except for this Agreement, or pursuant to the
exercise of stock options outstanding as of the date hereof and pursuant
to the terms thereof in existence on the date hereof, or as disclosed in
Section 7.2(d) of the BNR Disclosure Memorandum, issue, sell, pledge,
encumber, authorize the issuance of, enter into any Contract to issue,
sell, pledge, encumber, or authorize the issuance of, or otherwise permit
to become outstanding, any additional shares of BNR Common Stock or any
other capital stock of any BNR Company, or any Rights to acquire such
stock; or
(e) adjust, split, combine, or reclassify any capital
stock of any BNR
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Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of BNR Common Stock, or sell,
lease, mortgage, or otherwise dispose of or otherwise encumber any shares
of capital stock of any BNR Subsidiary (unless any such shares of stock
are sold or otherwise transferred to another BNR Company) or any Asset
having a book value in excess of $100,000 other than in the ordinary
course of business for reasonable and adequate consideration and other
than dispositions in the ordinary course of business of (i) investment
securities, (ii) loans, including dispositions thereof through loan
participation agreements, and (iii) other real estate owned by any BNR
Company; or
(f) except for purchases of U.S. Treasury securities,
U.S. Government agency securities and mortgage backed balloon loans,
which in each case have maturities of five years or less, and except for
collateralized mortgage obligations/planned amortization class (CMO/PAC),
purchase any securities or make any material investment, either by
purchase of stock or securities, contributions to capital, Asset
transfers, or purchase of any Assets, in any Person other than a wholly
owned BNR Subsidiary, or otherwise acquire direct or indirect control
over any Person, other than in connection with (i) foreclosures in the
ordinary course of business, or (ii) acquisitions of control by a
depository institution Subsidiary in its fiduciary capacity; or
(g) grant any increase in compensation or benefits to the
employees or officers of any BNR Company, except in accordance with past
practice or previously approved by the Board of Directors of BNR, in each
case as disclosed in Section 7.2(g) of the BNR Disclosure Memorandum or
as required by Law; except as disclosed in Section 7.2(g) of the BNR
Disclosure Memorandum, pay any severance or termination pay or any bonus
other than pursuant to written policies or written Contracts in effect on
the date of this Agreement and disclosed in Section 7.2(g) of the BNR
Disclosure Memorandum; and enter into or amend any severance agreements
with officers of any BNR Company; grant any increase in fees or other
increases in compensation or other benefits to directors of any BNR
Company except in accordance with past practice disclosed in Section
7.2(g) of the BNR Disclosure Memorandum; or voluntarily accelerate the
vesting of any stock options or other stock-based compensation or
employee benefits; or
(h) enter into or amend any employment Contract between
any BNR Company and any Person (unless such amendment is required by Law)
that the BNR Company does not have the unconditional right to terminate
without Liability (other than Liability for severance payments under the
existing severance policies of BNR disclosed in Section 7.2(h) of the BNR
Disclosure Memorandum), at any time on or after the Effective Time; or
(i) adopt any new employee benefit plan of any BNR
Company or make any material change in or to any existing employee
benefit plans of any BNR Company other than any such change that is
required by Law or that, in the opinion of counsel, is necessary or
advisable to maintain the tax qualified status of any such plan; or
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(j) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be
appropriate to conform to changes in Tax Laws or regulatory accounting
requirements or GAAP; or
(k) commence any material Litigation other than in
accordance with past practice, settle any Litigation involving any
Liability of any BNR Company for money damages in excess of $100,000 or
imposing material restrictions upon the operations of any BNR Company; or
(l) modify, amend, or terminate any material Contract
(other than any loan Contract, the modification, amendment, or
termination of which does not result in the BNR Companies recognizing a
loss that exceeds $50,000) or waive, release, compromise, or assign any
material rights or claims, other than in connection with the
modification, amendment, or termination of a loan Contract permitted
under the preceding clause of this paragraph (1).
7.3 COVENANTS OF FAB. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, FAB
covenants and agrees that, except as disclosed in Section 7.3 of the FAB
Disclosure Memorandum, it shall and shall cause each of its Subsidiaries to (x)
continue to conduct its business and the business of its Subsidiaries in a
manner designed in its reasonable judgment, to enhance the long-term value of
the FAB Common Stock and the business prospects of the FAB Companies and to the
extent consistent therewith use all reasonable efforts to preserve intact the
FAB Companies' core businesses and goodwill with their respective employees and
the communities they serve, (y) take no action which would (i) materially
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentences of Section 9.1(b) or
9.1(c) of this Agreement, or (ii) materially adversely affect the ability of
any Party to perform its covenants and agreements under this Agreement;
provided, that the foregoing shall not prevent any FAB Company from
discontinuing or disposing of any of its Assets or business if such action is,
in the judgment of FAB, desirable in the conduct of the business of FAB and its
Subsidiaries and such discontinuance or disposition would not represent a
material portion of the Assets of the FAB Companies, and (z) amend the
Certificate of Incorporation or Bylaws of FAB, in each case, in any manner
which is adverse to, and discriminates against, the holders of BNR Common
Stock. FAB further agrees that it shall not, directly or indirectly, acquire
or enter into any agreement in principle or definitive agreement to acquire,
any bank or savings and loan holding company, or any federal or state chartered
bank, savings bank, thrift homestead association, savings association, savings
and loan association, cooperative bank, or other similar financial institution
that has its principal business location in the Parish of Pointe Coupee,
Louisiana, whether by merger, consolidation, purchase, or otherwise, or
entering into discussions or negotiations with any such financial institution
with respect thereto.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give
written notice
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promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of it's representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.5 REPORTS. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time and shall deliver to the other Party
copies of all such reports promptly after the same are filed. If financial
statements are contained in any such reports filed with the SEC, such financial
statements will fairly present the consolidated financial position of the
entity filing such statements as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flow for the
periods then ended in accordance with GAAP (subject in the case of interim
financial statements to normal recurring year-end adjustments that are not
material and to the absence from interim financial statements of any (in the
case of BNR) or complete (in the case of FAB) footnote disclosures). As of the
respective dates, such reports filed with the SEC will comply in all material
respects with the Securities Laws and will not contain any untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority shall
be prepared in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER
APPROVAL.
(a) FAB shall promptly prepare and file the Registration
Statement with the SEC, and shall use its reasonable efforts to cause the
Registration Statement to become and remain effective under the 1933 Act and
take any action required to be taken under the applicable state Blue Sky or
securities Laws in connection with the issuance of the shares of FAB Common
Stock upon consummation of the Merger. BNR shall furnish all information
concerning it and the holders of its capital stock as FAB may reasonably
request in connection with such action. BNR shall call a Shareholders' Meeting
for the purpose of voting upon approval of this
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Agreement and such other related matters as it deems appropriate. FAB and BNR
agree to use their reasonable efforts to cause the Shareholders' Meeting to be
held on a date so as to minimize, to the extent reasonably practicable, the
period of time between the Shareholders' Meeting and the Effective Time. In
connection with the Shareholders' Meeting, (i) BNR shall mail the Proxy
Statement to its shareholders, (ii) the Parties shall furnish to each other all
information concerning them that they may reasonably request in connection with
such Proxy Statement, (iii) the Board of Directors of BNR shall recommend
(subject to compliance with their fiduciary duties as advised by counsel) to
its shareholders the approval of this Agreement, and (iv) the Board of
Directors and officers of BNR shall (subject to compliance with their fiduciary
duties as advised by counsel) use their reasonable efforts to obtain such
shareholders' approval.
(b) FAB shall indemnify and hold harmless BNR, each of
its directors and officers, and each Person, if any, who controls BNR within
the meaning of the 1933 Act against any losses, claims, damages, or
Liabilities, joint, several, or solidary, to which they or any of them may
become subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages, or Liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of material fact
contained in the Registration Statement or the Proxy Statement, or arising out
of or based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse each such Person for any legal or other
expenses reasonably incurred by such person in connection with investigating or
defending any such action or claim; provided, however, that FAB shall not be
liable in any such case to the extent that any such loss, claim, damage, or
Liability (or action in respect thereof) arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement or the Proxy Statement in reliance upon and
in conformity with information furnished to FAB by any indemnified Person.
Promptly after receipt by an indemnified Person of notice of the commencement
of any action, such indemnified Person shall, if a claim in respect thereof is
to be made against FAB under this Section 8.1(b), notify FAB in writing of the
commencement thereof. In case any such action shall be brought against any
indemnified Person and it shall notify FAB of the commencement thereof, FAB
shall be entitled to participate therein, and to the extent that it shall wish,
to assume the defense thereof, with counsel satisfactory to such indemnified
Person, and, after notice from FAB to such indemnified Person of its election
to so assume the defense thereof, FAB shall not be liable to such indemnified
party under this Section 8.1(b) for any legal expenses of other counsel or any
other expenses subsequently incurred by such indemnified Person, except that if
FAB elects not to assume such defense or counsel for an indemnified Person or
Persons advises in writing that there are material substantive issues which
raise conflicts of interests between FAB and one or more indemnified Persons,
such indemnified Person or Persons may retain counsel satisfactory to them, and
FAB shall pay all reasonable fees and expenses of such counsel for the
indemnified Persons, promptly as statements therefor are received; provided
that (i) FAB shall be obligated pursuant to this Section 8.1 (b) to pay for
only one firm of counsel for all indemnified Persons in any jurisdiction and
(ii) FAB shall not be liable for any settlement effected without its prior
written consent.
8.2 EXCHANGE LISTING. FAB shall use its reasonable efforts to
list, prior to the Effective Time, on the NASDAQ/NMS the shares of FAB Common
Stock to be issued to the holders of BNR Common Stock pursuant to the Merger.
8.3 APPLICATIONS. FAB shall promptly prepare and file, and BNR
shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite
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Consents necessary to consummate the transactions contemplated by this
Agreement. FAB shall permit BNR reasonable opportunity to review and comment
upon such applications prior to the filing thereof with the Regulatory
Authorities.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to
the conditions of this Agreement, FAB shall execute and file the Louisiana
Certificate of Merger with the Secretary of State of the State of Louisiana and
FAB shall execute and file the Delaware Certificate of Merger with the
Secretary of State of the State of Delaware in connection with the Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms
and conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to lift or rescind any
Order adversely affecting its ability to consummate the transactions
contemplated herein and to cause to be satisfied the conditions referred to in
Article 9 of this Agreement; provided, that nothing herein shall preclude
either Party from exercising its rights under this Agreement. Each Party shall
use, and shall cause each of its Subsidiaries to use, its reasonable efforts to
obtain all Consents necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep
the other Party advised of all material developments relevant to its business
and to consummation of the Merger and shall permit the other Party to make or
cause to be made such investigation of the business and properties of it and
its Subsidiaries and of their respective financial and legal conditions as the
other Party reasonably requests, provided that such investigation shall be
reasonably related to the transactions contemplated hereby and shall not
interfere unnecessarily with normal operations. BNR shall cooperate with FAB
in obtaining, at FAB's election and expense, environmental audits of any or all
of the properties owned or occupied by BNR. No investigation by a Party shall
affect the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its Representatives
to, maintain the confidentiality of all written, oral, and other confidential
information furnished to it by the other Party concerning its and its
Subsidiaries' businesses, operations, and financial positions ("Confidential
Information") and shall not use such information for any purpose except in
furtherance of the transactions contemplated by this Agreement. Each Party
shall maintain the confidentiality of all Confidential Information obtained in
connection with this Agreement or the transactions contemplated hereby unless
(i) such information becomes publicly available through no fault of such Party,
or was, is, or becomes available to that Party from a source other than the
other Party or its Representatives, which source was itself not bound by a
confidentiality agreement with, or other contractual, legal, or fiduciary
obligation of confidentiality with respect to that information, or (ii) the
furnishing or use of such information is required by proper
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judicial, administrative, or other legal proceeding, provided that the other
Party is promptly notified in writing of such request, unless such notification
is not, in the opinion of counsel, permitted by Law. Each Party and its
Representatives will hold and maintain all Confidential Information in
confidence and will not disclose to any third party or permit any third party
access to any Confidential Information or the substance thereof; provided that
a Party may disclose Confidential Information to such of its Representatives
who need to know such information in connection with the transactions
contemplated hereby. If this Agreement is terminated prior to the Effective
Time, each Party shall promptly return all documents and copies thereof, and
all work papers containing confidential information received from the other
Party.
(c) The terms of this Section 8.6 shall supersede that
certain Confidentiality Agreement, dated February 22, 1994 (the
"Confidentiality Agreement"), by and between FAB and BNR. BNR shall use its
reasonable efforts to exercise its rights under paragraph 6 of the form of
confidentiality agreement on which the Confidentiality Agreement was based that
was entered into with various third parties which were considering an
acquisition transaction with BNR to preserve the confidentiality of the
information relating to BNR provided to such parties.
8.7 PRESS RELEASES. Prior to the Effective Time, BNR and FAB
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and
the transactions contemplated hereby, no BNR Company nor any Affiliate thereof
nor any Representative retained by any BNR Company shall directly or indirectly
solicit any Acquisition Proposal by any Person. Except to the extent necessary
to comply with the fiduciary duties as advised by counsel of BNR's Board of
Directors, no BNR Company or any Affiliate or Representative thereof shall
furnish any non-public information that it is not legally obligated to furnish,
negotiate with respect to, or enter into any Contract with respect to, any
Acquisition Proposal, but BNR may communicate information about such an
Acquisition Proposal to its shareholders if and to the extent that it or its
directors are required to do so in order to comply with its or their fiduciary
duties as advised by counsel. BNR shall promptly notify FAB orally and in
writing in the event that it receives any inquiry or proposal relating to any
such transaction. BNR shall (i) immediately cease and cause to be terminated
any existing activities, discussions, or negotiations with any Persons
conducted heretofore with respect to any of the foregoing, and (ii) direct and
use its reasonable efforts to cause all of its Representatives not to engage in
any of the foregoing.
8.9 TAX TREATMENT. Each of the Parties undertakes and agrees to
use its reasonable efforts to cause the Merger, and to take no action which
would cause the Merger not, to qualify as a "reorganization" within the meaning
of Section 368(a) of the Internal Revenue Code for
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federal income tax purposes.
8.10 AGREEMENT OF AFFILIATES. BNR has disclosed in Section 8.10
of the BNR Disclosure Memorandum each Person whom it reasonably believes is an
"affiliate" of BNR for purposes of Rule 145 under the 1933 Act. BNR shall use
its reasonable efforts to cause each such Person to deliver to FAB not later
than 30 days prior to the Effective Time, a written agreement, substantially in
the form of Exhibit 2, providing that such Person will not sell, pledge,
transfer, or otherwise dispose of the shares of BNR Common Stock held by such
Person except as contemplated by such agreement or by this Agreement and will
not sell, pledge, transfer, or otherwise dispose of the shares of FAB Common
Stock to be received by such Person upon consummation of the Merger except in
compliance with applicable provisions of the 1933 Act and the rules and
regulations thereunder. FAB shall not be required to maintain the
effectiveness of the Registration Statement under the 1933 Act for the purposes
of resale of FAB Common Stock by such affiliates.
8.11 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective
Time, FAB shall provide generally to officers and employees of the BNR
Companies employee benefits under employee benefit plans (other than stock
option plans), on terms and conditions which when taken as a whole are
substantially similar to those currently provided by the FAB Companies to their
similarly situated officers and employees. For purposes of participation and
vesting (but not accrual of benefits) under such employee benefit plans, the
service of the employees of the BNR Companies prior to the Effective Time shall
be treated as service with a FAB Company participating in such employee benefit
plans. FAB also shall cause BNR and its Subsidiaries to honor in accordance
with their terms all employment, severance, consulting, and other compensation
Contracts disclosed in Section 8.11 of the BNR Disclosure Memorandum to FAB
between any BNR Company and any current or former director, officer, or
employee thereof, and all provisions for vested benefits or other vested
amounts earned or accrued through the Effective Time under the BNR Benefit
Plans.
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8.12 INDEMNIFICATION.
(a) For a period of ten years after the Effective Time,
FAB shall, and shall cause Bank of New Roads to, indemnify, defend, and hold
harmless the present and former directors, officers, employees, and agents of
the BNR Companies (each, an "Indemnified Party") against all Liabilities
arising out of actions or omissions occurring at or prior to the Effective Time
(including the transactions contemplated by this Agreement) to the full extent
permitted under Louisiana Law and by BNR's Articles of Incorporation and Bylaws
as in effect on the date hereof, including provisions relating to advances of
expenses incurred in the defense of any Litigation, provided, however, that the
indemnification provided by this Section 8.12(a) shall not apply to any claim
against an Indemnified Party if such Indemnified Party knew of the existence of
the claim and failed to make a good faith effort to require BNR to notify its
director and officer liability insurance carrier of the existence of such claim
prior to the Effective Time. Without limiting the foregoing, in any case in
which approval is required to effectuate any indemnification, the
determination of any such approval shall be made, at the election of the
Indemnified Party, by independent counsel mutually agreed upon between FAB and
the Indemnified Party.
(b) FAB shall use its reasonable efforts to maintain
BNR's existing directors' and officers' liability insurance policy (or a
policy, including FAB's existing policy, providing at least comparable
coverage) covering persons who are currently covered by such insurance for a
period of one (1) year after the Effective Time on terms generally no less
favorable than those in effect on the date of this Agreement; provided,
however, that FAB may substitute therefor policies providing at least
comparable coverage containing terms and conditions no less favorable than
those in effect on the date of this Agreement; and provided, further, that FAB
shall not be obligated to make premium payments for such one-year period which
exceed 150% of the aggregate premiums paid for such policy during the most
recent fiscal year.
(c) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 8.12, upon learning of any
such Liability or Litigation, shall promptly notify FAB thereof. In the event
of any such Litigation (whether arising before or after the Effective Time),
(i) FAB or Bank of New Roads shall have the right to assume the defense thereof
and FAB shall not be liable to such Indemnified Parties for any legal expenses
of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if FAB
or Bank of New Roads elects not to assume such defense or counsel for the
Indemnified Parties advises in writing that there are material substantive
issues which raise conflicts of interest between FAB or BNR and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
FAB or Bank of New Roads shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received; provided; that (i) FAB shall be obligated pursuant to this paragraph
(c) to pay for only one firm of counsel for all Indemnified Parties in any
jurisdiction, (ii) the Indemnified Parties will cooperate (to the extent
reasonably appropriate under the circumstances) in the defense of any such
Litigation, and (iii) FAB shall not be liable for any settlement effected
without its prior written consent; and provided further that BNR shall not
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have any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall determine, and such determination shall have
become final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable Law.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.6 of this Agreement:
(A) SHAREHOLDER APPROVAL. The shareholders of BNR shall
have approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required
by Law or by the provisions of any governing instruments.
(B) REGULATORY APPROVALS. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities
required for consummation of the Merger shall have been obtained or made
and shall be in full force and effect and all waiting periods required by
Law shall have expired. No Consent obtained from any Regulatory
Authority which is necessary to consummate the transactions contemplated
hereby shall be conditioned or restricted in a manner (including
requirements relating to the raising of additional capital or the
disposition of Assets) which in the reasonable judgment of the Board of
Directors of FAB would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement so
as to render inadvisable the consummation of the Merger. No Consent
obtained from any Regulatory Authority which is necessary to consummate
the transactions contemplated hereby shall condition or restrict the
operations of BNR after the Effective Time in a manner which in the
reasonable judgment of the Board of Directors of BNR would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement so as to render inadvisable the
consummation of the Merger.
(C) CONSENTS AND APPROVALS. Each Party shall have
obtained any and all Consents required for consummation of the Merger
(other than those referred to in Section 9.1(b) of this Agreement) or for
the preventing of any Default under any Contract or Permit of such Party
which, if not obtained or made, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on such
Party. No Consent so obtained which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a
manner which in the reasonable judgment of the Board of Directors of FAB
would so materially adversely impact the economic or business benefits of
the transactions contemplated by this Agreement so as to render
inadvisable the
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consummation of the Merger.
(D) LEGAL PROCEEDINGS. No court or governmental or
regulatory authority of competent jurisdiction shall have enacted,
issued, promulgated, enforced, or entered any Law or Order (whether
temporary, preliminary, or permanent) or taken any other action which
prohibits, restricts, or makes illegal consummation of the transactions
contemplated by this Agreement.
(E) REGISTRATION STATEMENT. The Registration Statement
shall be effective under the 1933 Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no
action, suit, proceeding, or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing, and
all necessary approvals under state securities Laws or the 1933 Act or
1934 Act relating to the issuance or trading of the shares of FAB Common
Stock issuable pursuant to the Merger shall have been received.
(F) EXCHANGE LISTING. The shares of FAB Common Stock
issuable pursuant to the Merger shall have been approved for listing on
the NASDAQ/NMS.
(G) TAX MATTERS. Each Party shall have received a
written opinion of Alston & Bird, special counsel to FAB, in form
reasonably satisfactory to the Parties (the "Tax Opinion"), to the effect
that (i) the Merger will constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code, (ii) the exchange in the
Merger of BNR Common Stock for FAB Common Stock will not give rise to
gain or loss to the shareholders of BNR with respect to such exchange
(except to the extent of any cash received), and (iii) neither BNR nor
FAB will recognize gain or loss as a consequence of the Merger. In
rendering such Tax Opinion, counsel for FAB shall be entitled to rely
upon representations of officers of BNR and FAB reasonably satisfactory
in form and substance to such counsel.
9.2 CONDITIONS TO OBLIGATIONS OF FAB. The obligations of FAB to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following
conditions, unless waived by FAB pursuant to Section 11.6(a) of this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of BNR set forth or referred to in this Agreement shall be
true and correct in all respects as of the date of this Agreement and as
of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to
a specified date shall speak only as of such date), except (i) as
expressly contemplated by this Agreement, or (ii) for representations and
warranties (other than the representations and warranties set forth in
Section 5.3 of this Agreement, which shall be true in all material
respects) the inaccuracies of which relate to matters that are not
reasonably likely to have, individually
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or in the aggregate, a Material Adverse Effect on BNR.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and
all of the agreements and covenants of BNR to be performed and complied
with pursuant to this Agreement and the other agreements contemplated
hereby prior to the Effective Time shall have been duly performed and
complied with in all material respects.
(C) CERTIFICATES. BNR shall have delivered to FAB (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions of its obligations set forth in Sections
9.2(a) and 9.2(b) of this Agreement have been satisfied, and (ii)
certified copies of resolutions duly adopted by BNR's Board of Directors
and shareholders evidencing the taking of all corporate action necessary
to authorize the execution, delivery, and performance of this Agreement,
and the consummation of the transactions contemplated hereby, all in such
reasonable detail as FAB and its counsel shall request.
(D) OPINION OF COUNSEL. FAB shall have received an
opinion of Stone, Pigman, Walther, Wittmann & Hutchinson, counsel to BNR,
dated as of the Effective Time, in form reasonably satisfactory to FAB,
as to the matters set forth in Exhibit 3.
(E) AFFILIATES AGREEMENTS. FAB shall have received from
each affiliate of BNR the affiliates letter referred to in Section 8.10
of this Agreement.
(F) CLAIMS LETTERS. Each of the directors and officers
of BNR shall have executed and delivered to FAB letters in substantially
the form of Exhibit 4.
9.3 CONDITIONS TO OBLIGATIONS OF BNR. The obligations of BNR to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following
conditions, unless waived by BNR pursuant to Section 11.6(b) of this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of FAB set forth or referred to in this Agreement shall be
true and correct in all respects as of the date of this Agreement and as
of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to
a specified date shall speak only as of such date), except (i) as
expressly contemplated by this Agreement, or (ii) for representations and
warranties (other than the representations and warranties set forth in
Section 6.3 of this Agreement, which shall be true in all material
respects) the inaccuracies of which relate to matters that are not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FAB.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and
all of the agreements and covenants of FAB to be performed and complied
with pursuant to this
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Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all
material respects.
(C) CERTIFICATES. FAB shall have delivered to BNR (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions of its obligations set forth in Sections
9.3(a) and 9.3(b) of this Agreement have been satisfied, and (ii)
certified copies of resolutions duly adopted by FAB's Board of Directors
evidencing the taking of all corporate action necessary to authorize the
execution, delivery, and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such
reasonable detail as BNR and its counsel shall request.
(D) OPINION OF COUNSEL. BNR shall have received an
opinion of Lange, Simpson, Robinson & Somerville, counsel to FAB, dated
as of the Effective Time, in form reasonably acceptable to BNR, as to the
matters set forth in Exhibit 5.
(E) FAIRNESS OPINION. BNR shall have received a letter
from Chaffe and Associates, Inc. or another financial adviser selected by
BNR dated not more than five days subsequent to the date of this
Agreement and to be updated to a date not more than five days prior to
the date of the Proxy Statement, to the effect that in the opinion of
such firm, the consideration to be received in the Merger by the
shareholders of BNR is fair to the shareholders of BNR from a financial
point of view.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of BNR, this Agreement may be terminated and the Merger abandoned
at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of FAB
and the Board of Directors of BNR; or
(b) By the Board of Directors of either Party in the
event of a material breach by the other Party of any representation or
warranty contained in this Agreement which cannot be or has not been
cured within 30 days after the giving of written notice to the breaching
Party of such breach and which breach would provide the non-breaching
Party the ability to refuse to consummate the Merger under the standard
set forth in Section 9.2(a) of this Agreement in the case of FAB and
Section 9.3(a) of this Agreement in the case of BNR; or
(c) By the Board of Directors of either Party in the
event of a material breach by the other Party of any covenant or
agreement contained in this Agreement which cannot
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be or has not been cured within 30 days after the giving of written
notice to the breaching Party of such breach; or
(d) By the Board of Directors of either Party in the
event (i) any Consent of any Regulatory Authority required for
consummation of the Merger and the other transactions contemplated hereby
shall have been denied by final nonappealable action of such authority or
if any action taken by such authority is not appealed within the time
limit for appeal, or (ii) the shareholders of BNR fail to vote their
approval of this Agreement and the transactions contemplated hereby as
required by the LBCL at the Shareholders' Meeting or any adjournment or
postponement thereof where the transactions were presented to such
shareholders for approval and voted upon; or
(e) By the Board of Directors of either Party in the
event that the Merger shall not have been consummated by March 31, 1995,
if the failure to consummate the transactions contemplated hereby on or
before such date is not caused by any breach of this Agreement by the
Party electing to terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party in the
event that any of the conditions precedent to the obligations of such
Party to consummate the Merger cannot be satisfied or fulfilled by the
date specified in Section 10.1(e) of this Agreement.
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, and neither Party shall have
any claim or legal right to redress, whether for breach of contract or
otherwise, as a result of a breach of any representation, warranty, covenant,
or condition of this Agreement, except that (i) the provisions of this Section
10.2 and Article 11 and Section 8.6(b) and (c) of this Agreement shall survive
any such termination and abandonment, and (ii) a termination pursuant to
Section 10.1(b), 10.1(c), or 10.1(f) of this Agreement shall not relieve the
breaching Party from Liability for an uncured willful and knowing breach of a
representation, warranty, material covenant, or material agreement giving rise
to such termination.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The
respective representations, warranties, obligations, covenants, and agreements
of the Parties shall not survive the Effective Time except this Section 10.3
and Articles 2, 3, 4, and 11 of this Agreement and Sections 8.1(b), 8.11, and
8.12 of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS. Except as otherwise provided herein, the
capitalized terms set forth below shall have the following meanings:
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"ACQUISITION PROPOSAL" with respect to a Party shall mean
any tender offer or exchange offer or any proposal for a merger,
acquisition of all of the stock or assets of, or other business
combination involving such Party or any of its Subsidiaries or the
acquisition of a substantial equity interest in, or a substantial portion
of the assets of, such Party or any of its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by, or under common control with such Person; (ii) any
officer, director, partner, employer, or direct or indirect beneficial
owner of any 10% or greater equity or voting interest of such Person; or
(iii) any other Person for which a Person described in clause (ii) acts
in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger,
including the Exhibits delivered pursuant hereto and incorporated herein
by reference.
"ASSETS" of a Person shall mean all of the assets,
properties, businesses, and rights of such Person of every kind, nature,
character, and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized
in such Person's business, directly or indirectly, in whole or in part,
whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of such
Person and wherever located.
"AVERAGE CLOSING PRICE" shall mean the average of the daily
closing sale prices of FAB Common Stock on the Nasdaq/NMS (as reported by
The Wall Street Journal or, if not reported thereby, another
authoritative source chosen by FAB) for the 20 consecutive full trading
days on which such shares are traded on the Nasdaq NMS ending at the
close of trading on the fifth trading day preceding the Effective Time.
"BHC ACT" shall mean the federal Bank Holding Company Act of
1956, as amended.
"BNR BENEFIT PLANS" shall have the meaning set forth in
Section 5.11 of this Agreement.
"BNR COMMON STOCK" shall mean the $10.00 par value common
stock of BNR.
"BNR COMPANIES" shall mean, collectively, BNR and all BNR
Subsidiaries.
"BNR DISCLOSURE MEMORANDUM" shall mean the written
information entitled "BNR Bancshares, Inc. Disclosure Memorandum"
delivered prior to the date of this Agreement to FAB describing in
reasonable detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made. Information
disclosed with respect
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to one Section shall not be deemed to be disclosed for purposes of any
other Section not specifically referenced with respect thereto.
"BNR FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of BNR as
of December 31, 1993 and 1992, and the related consolidated statements of
income, changes in stockholders' equity, and cash flows (including
related notes and schedules, if any) for each of the three fiscal years
ended December 31, 1993, 1992, and 1991, as filed by BNR in SEC
Documents, and (ii) the consolidated balance sheets of BNR (including
related notes and schedules, if any) and related statements of income,
changes in stockholders' equity, and cash flows (including related notes
and schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to December 31, 1993.
"BNR SUBSIDIARIES" shall mean the Subsidiaries of BNR, which
shall include the BNR Subsidiaries described in Section 5.4 of this
Agreement and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of BNR in the future and owned by
BNR at the Effective Time.
"CLOSING" shall mean the closing of the transactions
contemplated hereby, as described in Section 1.2 of this Agreement.
"CLOSING DATE" shall mean the date on which the Closing
occurs.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture, instrument,
lease, obligation, or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on any Person
or its capital stock, Assets, or business.
"DEFAULT" shall mean (i) any breach or violation of or
default under any Contract, Order, or Permit, (ii) any occurrence of any
event that with the passage of time or the giving of control or both
would constitute a breach or violation of or default under any Contract,
Order, or Permit, or (iii) any occurrence of any event that with or
without the passage of time or the giving of notice would give rise to a
right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase, or impose any Liability under,
any Contract, Order, or Permit.
"DELAWARE CERTIFICATE OF MERGER" shall mean the Delaware
Certificate of Merger to be executed by FAB and filed with the Secretary
of State of the State of Delaware relating to the Merger as contemplated
by Section 1.1 of this Agreement.
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"DGCL" shall mean the General Corporation Law of Delaware.
"EFFECTIVE TIME" shall mean the date and time at which the
Merger becomes effective as defined in Section 1.3 of this Agreement.
"ENVIRONMENTAL LAWS" shall mean all Laws pertaining to
pollution or protection of the environment and which are administered,
interpreted, or enforced by the United States Environmental Protection
Agency and state and local agencies with jurisdiction over pollution or
protection of the environment.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA AFFILIATE" shall have the meaning provided in Section
5.11 of this Agreement.
"ERISA PLAN" shall have the meaning provided in Section 5.11
of this Agreement.
"EXCHANGE AGENT" shall have the meaning provided in Section
4.1 of this Agreement.
"EXCHANGE RATIO" shall have the meaning provided in Section
3.1(b) of this Agreement.
"EXHIBITS" 1 through 5, inclusive, shall mean the Exhibits
so marked, copies of which are attached to this Agreement. Such Exhibits
are hereby incorporated by reference herein and made a part hereof, and
may be referred to in this Agreement and any other related instrument or
document without being attached hereto.
"FAB COMMON STOCK" shall mean the $0.625 par value common
stock of FAB.
"FAB COMPANIES" shall mean, collectively, FAB and all FAB
Subsidiaries.
"FAB DISCLOSURE MEMORANDUM" shall mean the written
information entitled "First Alabama Bancshares, Inc. Disclosure
Memorandum" delivered prior to the date of this Agreement to BNR
describing in reasonable detail the matters contained therein and, with
respect to each disclosure made therein, specifically referencing each
Section of this Agreement under which such disclosure is being made.
Information disclosed with respect to one Section shall not be deemed to
be disclosed for purposes of any other Section not specifically
referenced with respect thereto.
"FAB FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of
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condition (including related notes and schedules, if any) of FAB as of
December 31, 1993 and 1992, and the related statements of income, changes
in shareholders' equity, and cash flows (including related notes and
schedules, if any) for each of the three years ended December 31, 1993,
1992, and 1991, as filed by FAB in SEC Documents and (ii) the
consolidated statements of condition of FAB (including related notes and
schedules, if any) and related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to December 31, 1993.
"FAB SUBSIDIARIES" shall mean the Subsidiaries of FAB at the
Effective Time.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean any pollutant, contaminant,
or toxic or hazardous substance, pollutant, chemical, or waste within the
meaning of the Comprehensive Environment Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq., or any similar federal,
state, or local Law (and specifically shall include asbestos requiring
abatement, removal, or encapsulation pursuant to the requirements of
governmental authorities, polychlorinated biphenyls, and petroleum and
petroleum products).
"HOLA" shall mean the Home Owners' Loan Act of 1933, as
amended.
"HSR ACT" shall mean Section 7A of the Clayton Act, as added
by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder.
"KNOWLEDGE" as used with respect to a Person shall mean the
actual knowledge of the chairman, president, chief financial officer,
chief accounting officer, chief credit officer, general counsel, any
assistant or deputy general counsel, or any senior or executive vice
president of such Person.
"LBCL" shall mean the Louisiana Business Corporation Law.
"LAW" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a
Person or its Assets, Liabilities, or business, including those
promulgated, interpreted, or enforced by any of the Regulatory
Authorities.
"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost, or expense
(including costs of investigation, collec-
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tion, and defense), claim, deficiency, guaranty, or endorsement of or by
any Person (other than endorsements of notes, bills, checks, and drafts
presented for collection or deposit in the ordinary course of business)
of any type, whether accrued, absolute, or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement,
lien, mortgage, pledge, reservation, restriction, security interest,
title retention, or other security arrangement, or any adverse right or
interest, charge, or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other than (i) Liens for
current property Taxes not yet due and payable, (ii) such imperfections
of title and encumbrances, if any, as do not materially detract from the
value or interfere with the present use of any of such Party's Assets,
and (iii) for depository institution Subsidiaries of a Party, pledges to
secure deposits, and other Liens incurred in the ordinary course of the
banking business.
"LITIGATION" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing, inquiry,
administrative, or other proceeding, or notice (written or oral) by any
Person alleging potential Liability or requesting information about a
potential claim relating to or affecting a Party, its business, its
Assets (including Contracts related to it), or the transactions
contemplated by this Agreement, but shall not include regular, periodic
examinations of depository institutions and their Affiliates by
Regulatory Authorities.
"LOAN PROPERTY" shall mean any property owned by the Party
in question or by any of its Subsidiaries or in which such Party or
Subsidiary holds a security interest, and, where required by the context,
includes the owner or operator of such property, but only with respect to
such property.
"LOUISIANA CERTIFICATE OF MERGER" shall mean the Louisiana
Certificate of Merger to be executed by FAB and filed with the Secretary
of State of the State of Louisiana relating to the Merger as contemplated
by Section 1.1 of this Agreement.
"MATERIAL" for purposes of this Agreement shall be
determined in light of the facts and circumstances of the matter in
question; provided that any specific monetary amount stated in this
Agreement shall determine materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event,
change, or occurrence which, together with any other event, change, or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of such Party and its Subsidiaries,
taken as a whole, or (ii) the ability of such Party to perform its
obligations under this Agreement or to consummate the Merger or the other
transactions contemplated by this Agreement, provided that "material
adverse impact" shall not be deemed to include the impact of (x) changes
in banking and similar Laws of general applicability or interpretations
thereof by courts or governmental authorities, or (y) changes
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in GAAP or regulatory accounting principles generally applicable to banks
and savings associations and their holding companies.
"MERGER" shall mean the merger of BNR into and with FAB
referred to in Section 1.1 of this Agreement.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"NASDAQ/NMS" shall mean the National Market System of the
National Association of Securities Dealers' Automated Quotations System.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"ORDER" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award,
ruling, or writ of any federal, state, local, or foreign or other court,
arbitrator, mediator, tribunal, administrative agency, or Regulatory
Authority.
"PARTICIPATION FACILITY" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates in
the management and, where required by the context, said term means the
owner or operator of such facility or property, but only with respect to
such facility or property.
"PARTY" shall mean either BNR or FAB, and "PARTIES" shall
mean both BNR and FAB.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets, or business.
"PERSON" shall mean a natural person or any legal,
commercial, or governmental entity, such as, but not limited to, a
corporation, general partnership, joint venture, limited partnership,
limited liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.
"PROXY STATEMENT" shall mean the proxy statement used by BNR
to solicit the approval of its shareholders of the transactions
contemplated by this Agreement, which shall include the prospectus of FAB
relating to the issuance of the FAB Common Stock to holders of BNR Common
Stock.
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"REGISTRATION STATEMENT" shall mean the Registration
Statement on Form S-4, or other appropriate form, including any
pre-effective or post-effective amendments or supplements thereto, filed
with the SEC by FAB under the 1933 Act with respect to the shares of FAB
Common Stock to be issued to the shareholders of BNR in connection with
the transactions contemplated by this Agreement and which shall include
the Proxy Statement.
"REGULATORY AUTHORITIES" shall mean, collectively, the
Federal Trade Commission, the United States Department of Justice, the
Board of the Governors of the Federal Reserve System, the Office of
Thrift Supervision (including its predecessor, the Federal Home Loan Bank
Board), the Office of the Comptroller of the Currency, Federal Deposit
Insurance Corporation, all state regulatory agencies having jurisdiction
over the Parties and their respective Subsidiaries, the NYSE, the NASD,
and the SEC.
"REPRESENTATIVES" means with respect to any Party its
directors, officers, employees, agents, advisors, attorneys, accountants,
and other representatives.
"RIGHTS" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person or by which a Person is or
may be bound to issue additional shares of its capital stock or other
Rights.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act
of 1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"SHAREHOLDERS' MEETING" shall mean the meeting of the
shareholders of BNR to be held pursuant to Section 8.1 of this
Agreement, including any adjournment or adjournments thereof.
"SUBSIDIARIES" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or
controls 50% or more of the outstanding equity securities either directly
or through an unbroken chain of entities as to each of which 50% or more
of the outstanding equity securities is owned directly or indirectly by
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its parent; provided, there shall not be included any such entity
acquired through foreclosure or any such entity the equity securities of
which are owned or controlled in a fiduciary capacity.
"SURVIVING CORPORATION" shall mean FAB as the surviving
corporation resulting from the Merger.
"TAX" or "TAXES" shall mean any federal, state, county,
local, or foreign income, profits, franchise, gross receipts, payroll,
sales, employment, use, property, withholding, excise, occupancy, and
other taxes, assessments, charges, fares, or impositions, including
interest, penalties, and additions imposed thereon or with respect
thereto.
Any singular term in this Agreement shall be deemed to include the plural, and
any plural term the singular. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed followed by the
words "without limitation."
11.2 EXPENSES.
(a) Except as otherwise provided in this Section 11.2,
each of the Parties shall bear and pay all direct costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including filing, registration, and application fees, printing fees,
and fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel, except that FAB shall bear and pay the
filing fees payable in connection with the Registration Statement and the Proxy
Statement and printing costs incurred in connection with the printing of the
Registration Statement and the Proxy Statement.
(b) Nothing contained in this Section 11.2 shall
constitute or shall be deemed to constitute liquidated damages for the willful
and knowing breach by a Party of the terms of this Agreement or otherwise limit
the rights of the nonbreaching Party.
11.3 BROKERS AND FINDERS. Except Chaffe & Associates, Inc. as to
BNR, each of the Parties represents and warrants that neither it nor any of its
officers, directors, employees, or Affiliates has employed any broker or finder
or incurred any Liability for any financial advisory fees, investment bankers'
fees, brokerage fees, commissions, or finders' fees in connection with this
Agreement or the transactions contemplated hereby. In the event of a claim by
any broker or finder based upon his or its representing or being retained by or
allegedly representing or being retained by BNR or FAB, each of BNR and FAB, as
the case may be, agrees to indemnify and hold the other Party harmless of and
from any Liability in respect of any such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to
the transactions contemplated hereunder and
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supersedes all prior arrangements or understandings with respect thereto,
written or oral. Except as contemplated by Articles 3 and 4 of this Agreement
and Sections 8.1(b) and 8.12 of this Agreement, nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement
may be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties; provided, that
after any such approval by the holders of BNR Common Stock, there shall be made
no amendment that pursuant to the LBCL requires further approval by such
shareholders without the further approval of such shareholders.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, FAB, acting
through its Board of Directors, chief executive officer, or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by BNR, to waive or extend the time for the compliance
or fulfillment by BNR of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of FAB
under this Agreement, except any condition which, if not satisfied, would
result in the violation of any Law. No such waiver shall be effective unless
in writing signed by a duly authorized officer of FAB.
(b) Prior to or at the Effective Time, BNR, acting
through its Board of Directors, chief executive officer, or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by FAB, to waive or extend the time for the compliance
or fulfillment by FAB of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of BNR
under this Agreement, except any condition which, if not satisfied, would
result in the violation of any Law. No such waiver shall be effective unless
in writing signed by a duly authorized officer of BNR.
(c) The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other provision of
this Agreement. No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall be deemed to be or
construed as a further or continuing waiver of such condition or breach or a
waiver of any other condition or of the breach of any other term of this
Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby,
neither this Agreement nor any of the rights, interests, or obligations
hereunder shall be assigned by any Party hereto (whether by operation of Law or
otherwise) without the prior written consent of the other Party. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by the Parties and their respective successors
and assigns.
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11.8 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:
<TABLE>
<S> <C>
BNR: BNR Bancshares, Inc.
107 East Main Street
New Roads, Louisiana 70760
Telecopy Number: (504) 581-3361
Attention: F. J. Greely, Jr.
President and Chief Executive Officer
Copy to Counsel: Stone, Pigman, Walther, Wittmann & Hutchinson
546 Carondelet Street
New Orleans, Louisiana 70130-3588
Telecopy Number: (504) 581-3361
Attention: Paul M. Haygood
FAB: First Alabama Bancshares, Inc.
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: Richard D. Horsley
Vice Chairman and Executive Financial Officer
Copy to Counsel: First Alabama Bancshares, Inc.
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: L. Burton Barnes, III
Corporate Secretary and General Counsel
</TABLE>
11.9 GOVERNING LAW. Except to the extent the laws of the State
of Louisiana apply to the Merger, this Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware, without regard
to any applicable conflicts of Laws.
11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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11.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.12 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
11.13 SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement
to be executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ATTEST: BNR BANCSHARES, INC.
/s/ Charles Ray Smith /s/ Frank J. Greely, Jr.
- --------------------- ------------------------
Secretary F. J. Greely, Jr.
President and Chief Executive Officer
[CORPORATE SEAL]
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<PAGE> 104
ATTEST: FIRST ALABAMA BANCSHARES, INC.
/s/ Virginia L. Martin /s/ Carl L. Jones, Jr.
- ---------------------- ----------------------
Virginia L. Martin Carl L. Jones, Jr.
Assistant Secretary Regional President
[CORPORATE SEAL]
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<PAGE> 105
APPENDIX B
[LOGO]
CHAFFE & ASSOCIATES, INC.
INVESTMENT BANKERS
July 26, 1994
The Board of Directors
BNR Bancshares, Inc.
107 E. Main Street
P.O. Box 250
New Roads, LA 70760
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to BNR Bancshares, Inc. ("BNR") and its stockholders, of the proposed
acquisition of its common stock, $10.00 par value per share (the "Common Stock"
or "Shares"), by Regions Financial Corporation ("Regions"), formerly First
Alabama Bancshares, Inc. ("FAB"). The terms of the transaction contemplated
are set forth in an Agreement and Plan of Merger, dated as of April 21, 1994
(the "Agreement"), and provide that BNR will be merged with and into Regions,
and that Regions will be the surviving corporation of the merger. As a result,
the stockholders of BNR will become stockholders of Regions.
Each share of BNR Common Stock (excluding shares held by BNR or
any of its subsidiaries or by Regions or any of its subsidiaries,
in each case other than in a fiduciary capacity or as a result of
debts previously contracted, and excluding shares held by
stockholders who perfect their dissenter's rights of appraisal)
issued and outstanding after the date and time at which the
merger becomes effective, shall be converted into and exchanged
for that number of shares of Regions Common Stock (the "Exchange
Ratio") equal to the quotient obtained by dividing (i) $79.70 by
(ii) the Average Closing Price; provided, however, that in the
event the Average Closing Price is (a) less than $26.00, the
Exchange Ratio shall be 3.065, or (b) greater than $36.00, the
Exchange Ratio shall be 2.214.
Chaffe & Associates, Inc. ("Chaffe"), through its experience in the securities
industry, in investment analysis and appraisal, and in related corporate
finance and investment banking activities, including mergers and acquisitions,
corporate recapitalization, and valuations for estate, corporate and other
purposes, states that it is competent to provide an opinion as to the fairness
of the transactions contemplated herein. Neither Chaffe nor any of its
officers or employees has an interest in the common stocks of BNR or Regions.
During the past year, Chaffe has provided financial advisory services to BNR,
including assistance in negotiating the proposed transaction ("Advisory
Services"). The fee received for the preparation of this report is not, and
fees received for Advisory Services were not, dependent or contingent upon any
transaction.
220 CAMP STREET*NEW ORLEANS, LOUSIANA 70130*(504) 524-1801*FAX (504) 524-7194
B-1
<PAGE> 106
CHAFFE & ASSOCIATES, INC.
The Board of Directors
BNR Bancshares, Inc.
July 26, 1994
Page Two
In connection with this opinion, we have reviewed materials bearing
upon the transaction and upon the financial and operating condition of BNR and
its wholly-owned subsidiary, Bank of New Roads (the "Bank"), including, among
other information: a) the Agreement; b) BNR's audited financial statements with
examination and opinion by Hannis T. Bourgeois & Co., Certified Public
Accountants, for the years 1988 through 1993; c) BNR's unaudited financial
statements for the periods ended March 31, 1994 and June 30, 1994; d) BNR's
Annual Reports on Form 10-K for the years 1992 and 1993 and Quarterly Reports
on Form 10-Q for the quarters ended March 31, June 30, and September 30, 1993
and March 31, 1994; e) BNR's Federal Reserve Forms FR-Y6 dated December 31,
1992 and December 31, 1993; f) BNR's Income Tax Return for 1992 and 1993
prepared by Hannis T. Bourgeois & Co., Certified Public Accountants; g) the
Bank's CALL Reports for each quarter-end from March 31, 1992 through March 31,
1994; h) the Bank's Uniform Bank Performance Reports dated December 31, 1992
and December 31, 1993; i) the Bank's unaudited financial statements for the
periods ended March 31, 1994 and June 30, 1994; j) the Bank's 1994 Budget; k)
the Bank's Capital Plan for the years 1993 through 1998, dated January 17, 1994
under two scenarios; l) Articles of Incorporation and By-Laws of BNR, and the
Charter of the Bank; and m) various BNR and Bank management reports, unaudited
financial statements, information, documents and correspondence.
In addition, we have reviewed materials bearing upon the financial and
operating condition of Regions, including: a) Regions' audited financial
statements for the years 1988 through 1993; b) Regions' Proxy Statements for
Annual Shareholders Meetings held in 1988 through 1994; c) Regions' Annual
Reports on Form 10-K for the years 1987 through 1993 and Quarterly Reports on
Form 10-Q for the quarters ended March 31, June 30, and September 30, 1993,
and March 31, 1994; d) Regions Registration Statement on Form S-3, dated June
21, 1994; e) Regions' Registration Statement on Form S-4 related to the
marger; and f) various Regions unaudited financial statements, information,
and correspondence. We have also reviewed publicly available statistical and
financial information for, and analyses of, BNR, the Bank, and Regions, and
comparable companies derived from various statistical services.
We have reviewed certain historical market information for the common
stock of BNR and note that no independent market exists for the shares. We
note that, at present, BNR has authorized 5,000,000 shares, has issued 337,500
shares, has outstanding 326,218 shares, and holds as treasury stock 11,282
shares. In addition, we have reviewed certain historical market information
for the common stock of Regions. We note that Regions has authorized 120
million shares of Regions common stock, of which 42,538,946 shares were
issued, including 1,475,579 treasury shares as of March 31, 1994.
B-2
<PAGE> 107
CHAFFE & ASSOCIATES, INC.
The Board of Directors
BNR Bancshares, Inc.
July 26, 1994
Page Three
We have analyzed the historical performance of BNR and Regions and have
considered the current financial condition, operations, and prospects for both
companies. We have held discussions with the management of both companies about
these matters. We analyzed information and data provided by the management of
BNR concerning the loans, other real estate, securities portfolio, fixed
assets, and operations, although we did not perform an independent review of
BNR's assets or liabilities. We have relied solely on BNR and Regions for
information as to the adequacy of their loan loss reserves and the value of
their repossessed assets, respectively.
Also, we compared certain financial and stock market data for peer groups of
bank holding companies whose securities are publicly traded; reviewed the
financial terms of business combinations in the commercial banking industry
specifically and other industries generally; considered a number of valuation
methodologies, including among others, those that incorporate book value,
deposit base premium and capitalization of earnings; and performed such other
studies and analyses as we deemed appropriate to this analysis. This opinion
is necessarily based upon market, economic and other conditions as they exist
on, and can be evaluated as of, the date of this letter.
In our review, we have relied, without independent verification, upon the
accuracy and completeness of the historical and projected financial information
and other information reviewed by us for purposes of this opinion. We express
no opinion on the tax consequences of the proposed transaction or the effect of
any tax consequences on the value received by the holders of BNR Common Stock.
Based upon and subject to the foregoing and based upon such other matters as we
considered relevant, it is our opinion that the proposed Exchange Ratio is fair
to BNR Bancshares, Inc. and its stockholders from a financial point of view.
Very truly yours,
CHAFFE & ASSOCIATES, INC.
GFGL:cbs
B-3
<PAGE> 108
Appendix C
Louisiana Statutes Annotated-Revised Statutes 12:131
Section 131. Rights of a shareholder dissenting from certain corporate actions
A. Except as provided in subsection B of this section, if a
corporation has, by vote of its shareholders, authorized a sale, lease or
exchange of all of its assets, or has, by vote of its shareholders, become a
party to a merger or consolidation, then, unless such authorization or action
shall have been given or approved by at least eighty per cent of the total
voting power, a shareholder who voted against such corporate action shall have
the right to dissent. If a corporation has become a party to a merger pursuant
to R.S. 12:112(H), the shareholders of any subsidiaries party to the merger
shall have the right to dissent without regard to the proportion of the voting
power which approved the merger and despite the fact that the merger was not
approved by vote of the shareholders of any of the corporations involved.
B. The right to dissent provided by this Section shall not exist in
the case of:
(1) A sale pursuant to an order of a court having jurisdiction in the
premises.
(2) A sale for cash on terms requiring distribution of all or
substantially all of the net proceeds to the shareholders in accordance with
their respective interests within one year after the date of the sale.
(3) Shareholders holding shares of any class of stock which, at the
record date fixed to determine shareholders entitled to receive notice of and
to vote at the meeting of shareholders at which a merger or consolidation was
acted on, were listed on a national securities exchange, unless the articles of
the corporation issuing such stock provide otherwise or the shares of such
shareholders were not converted by the merger or consolidation solely into
shares of the surviving or new corporation.
C. Except as provided in the last sentence of this subsection, any
shareholder electing to exercise such right of dissent shall file with the
corporation, prior to or at the meeting of shareholders at which such proposed
corporate action is submitted to a vote, a written objection to such proposed
corporate action, and shall vote his shares against such action. If such
proposed corporate action be taken by the required vote, but by less than
eighty per cent of the total voting power, and the merger, consolidation or
sale, lease or exchange of assets authorized thereby be effected, the
corporation shall promptly thereafter give written notice thereof, by
registered mail, to each shareholder who filed such written objection to, and
voted his shares against, such action, at such shareholder's last address on
the corporation's
C-1
<PAGE> 109
records. Each such shareholder may, within twenty days after the mailing of
such notice to him, but not thereafter, file with the corporation a demand in
writing for the fair cash value of his shares as of the day before such vote
was taken; provided that he state in such demand the value demanded, and a post
office address to which the reply of the corporation may be sent, and at the
same time deposit in escrow in a chartered bank or trust company located in the
parish of the registered office of the corporation, the certificates
representing his shares, duly endorsed and transferred to the corporation upon
the sole condition that said certificates shall be delivered to the corporation
upon payment of the value of the shares determined in accordance with the
provisions of this section. With his demand the shareholder shall deliver to
the corporation, the written acknowledgment of such bank or trust company that
it so holds his certificates of stock. Unless the objection, demand and
acknowledgment aforesaid be made and delivered by the shareholder within the
period above limited, he shall conclusively be presumed to have acquiesced in
the corporate action proposed or taken. In the case of a merger pursuant to
R.S. 12:112(H), the dissenting shareholder need not file an objection with the
corporation nor vote against the merger, but need only file with the
corporation, within twenty days after a copy of the merger certificate was
mailed to him, a demand in writing for the cash value of his shares as of the
day before the certificate was filed with the secretary of state, state in such
demand the value demanded and a post office address to which the corporation's
reply may be sent, deposit the certificates representing his shares in escrow
as hereinabove provided, and deliver to the corporation with his demand the
acknowledgment of the escrow bank or trust company as hereinabove prescribed.
D. If the corporation does not agree to the value so stated and
demanded, or does not agree that a payment is due, it shall, within twenty days
after receipt of such demand and acknowledgment, notify in writing the
shareholder, at the designated post office address, of its disagreement, and
shall state in such notice the value it will agree to pay if any payment should
be held to be due; otherwise it shall be liable for, and shall pay to the
dissatisfied shareholder, the value demanded by him for his shares.
E. In case of disagreement as to such fair cash value, or as to
whether any payment is due, after compliance by the parties with the provisions
of subsections C and D of this section, the dissatisfied shareholder, within
sixty days after receipt of notice in writing of the corporation's
disagreement, but not thereafter, may file suit against the corporation, or the
merged or consolidated corporation, as the case may be, in the district court
of the parish in which the corporation or the merged or consolidated
corporation, as the case may be, has its registered office, praying the court
to fix and decree the fair cash value of the dissatisfied shareholder's shares
as of the day before such corporate action complained of was taken, and the
court shall, on
C-2
<PAGE> 110
such evidence as may be adduced in relation thereto, determine summarily
whether any payment is due, and, if so, such cash value, and render judgment
accordingly. Any shareholder entitled to file such suit may, within such
sixty-day period but not thereafter, intervene as a plaintiff in such suit
filed by another shareholder, and recover therein judgment against the
corporation for the fair cash value of his shares. No order or decree shall be
made by the court staying the proposed corporate action, and any such corporate
action may be carried to completion notwithstanding any such suit. Failure of
the shareholder to bring suit, or to intervene in such a suit, within sixty
days after receipt of notice of disagreement by the corporation shall
conclusively bind the shareholder (1) by the corporation's statement that no
payment is due, or (2) if the corporation does not contend that no payment is
due, to accept the value of his shares as fixed by the corporation in its
notice of disagreement.
F. When the fair value of the shares has been agreed upon between the
shareholder and the corporation, or when the corporation has become liable for
the value demanded by the shareholder because of failure to give notice of
disagreement and of the value it will pay, or when the shareholder has become
bound to accept the value the corporation agrees is due because of his failure
to bring suit within sixty days after receipt of notice of the corporation's
disagreement, the action of the shareholder to recover such value must be
brought within five years from the date the value was agreed upon, or the
liability of the corporation became fixed.
G. If the corporation or the merged or consolidated corporation, as
the case may be, shall, in its notice of disagreement, have offered to pay to
the dissatisfied shareholder on demand an amount in cash deemed by it to be the
fair cash value of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the amount so offered,
the corporation, or the merged or consolidated corporation, as the case may be,
shall deposit in the registry of the court, there to remain until the final
determination of the cause, the amount so offered, then, if the amount finally
awarded such shareholder, exclusive of interest and costs, be more than the
amount offered and deposited as aforesaid, the costs of the proceeding shall be
taxed against the corporation, or the merged or consolidated corporation, as
the case may be; otherwise the costs of the proceeding shall be taxed against
such shareholder.
H. Upon filing a demand for the value of his shares, the shareholder
shall cease to have any of the rights of a shareholder except the rights
accorded by this section. Such a demand may be withdrawn by the shareholder at
any time before the corporation gives notice of disagreement, as provided in
subsection D of this section. After such notice of disagreement is given,
withdrawal of a notice of election shall require the written consent of the
C-3
<PAGE> 111
corporation. If a notice of election is withdrawn, or the proposed corporate
action is abandoned or rescinded, or a court shall determine that the
shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenter's rights, he shall not have the
right to receive payment for his shares, his share certificates shall be
returned to him (and, on his request, new certificates shall be issued to him
in exchange for the old ones endorsed to the corporation), and he shall be
reinstated to all his rights as a shareholder as of the filing of his demand
for value, including any intervening preemptive rights, and the right to
payment of any intervening dividend or other distribution, or, if any such
rights have expired or any such dividend or distribution other than in cash has
been completed, in lieu thereof, at the election of the corporation, the fair
value thereof in cash as determined by the board as of the time of such
expiration or completion, but without prejudice otherwise to any corporate
proceedings that may have been taken in the interim.
C-4
<PAGE> 112
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 10 of the Certificate of Incorporation of the Registrant
provides:
"(a) The corporation shall indemnify its officers, directors,
employees, and agents to the full extent permitted by the General
Corporation Law of Delaware. (b) No director of the corporation shall
be personally liable to the corporation or its stockholders for
monetary damages, for breach of fiduciary duty as a director, except
for liability (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders; (ii) for acts or omissions not in
good faith which involved intentional misconduct or a knowing
violation of law; (iii) under Section 174 of the Delaware General
Corporation Law; or (iv) for any transaction from which the director
derived an improper personal benefit."
Section 145 of the Delaware General Corporation law empowers the
Company to indemnify its officers and directors under certain circumstances.
The pertinent provisions of that statute read as follows:
"(a) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
"(b) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or
was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against
<PAGE> 113
expenses (including attorneys' fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court
of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem
proper.
"(c) To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsections
(a) and (b) of this section, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
"(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section. Such
determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties
to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (3)
by the stockholders.
"(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to
be indemnified by the corporation as authorized in this section. Such
expenses (including attorneys' fees) incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the
board of directors deems appropriate.
"(f) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other subsections of this section
shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled
under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and
as to action in another capacity while holding such office.
"(g) A corporation shall have power to purchase and maintain insurance
<PAGE> 114
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not
the corporation would have the power to indemnify him against such
liability under this section.
"(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority
to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of
such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this section with
respect to the resulting or surviving corporation as he would have
with respect to such constituent corporation if its separate existence
had continued.
"(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at
the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which imposes
duties on, or involves services by, such director, officer, employee
or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have
acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
"(j) The indemnification and advancement of expenses provided
by, or granted pursuant to, this section shall, unless otherwise
provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a
person."
The Company has purchased a directors' and officers' liability
insurance contract which provides, within stated limits, reimbursement either
to a director or officer whose actions in his capacity result in liability, or
to the Registrant, in the event it has indemnified the director or officer.
Major exclusions from coverage include libel, slander, personal profit based on
inside information, illegal payments, dishonesty, accounting of securities
profits in violation of Section 16(b) of the Securities Exchange Act of 1934
and acts within the scope of the Pension Reform Act of 1974.
<PAGE> 115
ITEM 21. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger dated as of April 21, 1994 by and between BNR Bancshares, Inc. and Regions Financial
Corporation (formerly First Alabama Bancshares, Inc.) -- included as Appendix A to the Proxy Statement/
Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation. (Previously filed)
4.2 -- By-laws of Regions Financial Corporation. (Previously filed)
5. -- Opinion re: legality.
8. -- Opinion re: tax matters.
23.1 -- Consent of Ernst & Young.
23.2 -- Consent of Hannis T. Bourgeois & Co. (Previously filed)
23.3 -- Consent of Chaffe & Associates, Inc.
23.4 -- Consent of Lange, Simpson, Robinson & Somerville -- included in Exhibit 5.
23.5 -- Consent of Alston & Bird -- included in Exhibit 8.
24. -- Power of Attorney -- the manually signed power of attorney is set forth in the signature page of the registration
statement.
99.1 -- Form of proxy.
99.2 -- Documents of BNR incorporated herein by reference, consisting of the Annual Report of BNR on Form 10-KSB, for the
fiscal year ended December 31, 1993, as amended, including that portion of BNR's Annual Report to
Stockholders incorporated by reference therein, the Quarterly Report of BNR on Form 10-Q for the quarter ended
March 31, 1994, and the Current Report of BNR on Form 8-K dated as of March 16, 1994.
</TABLE>
ITEM 22. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
B. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public
<PAGE> 116
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
C.(1) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
D. The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
E. The undersigned Registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE> 117
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Birmingham, State of Alabama on this the 25th day of July, 1994.
REGISTRANT:
REGIONS FINANCIAL CORPORATION
BY: /s/ RICHARD D. HORSLEY
-----------------------
Richard D. Horsley
Vice Chairman of the Board and
Executive Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------ ------------------
<S> <C> <C>
* Chairman of the Board and July 25, 1994
---------------------- Chief Executive Officer and
J. Stanley Mackin Director
/s/ RICHARD D. HORSLEY Vice Chairman of the Board and July 25, 1994
---------------------- Executive Financial Officer
Richard D. Horsley and Director
* Executive Vice President and July 25, 1994
---------------------- Comptroller
Robert P. Houston
Sheila S. Blair Director
</TABLE>
<PAGE> 118
<TABLE>
<S> <C> <C>
* Director July 25, 1994
-------------------------------
James B. Boone, Jr.
* Director July 25, 1994
-------------------------------
Albert P. Brewer
* Director July 25, 1994
-------------------------------
James S.M. French
* Director July 25, 1994
-------------------------------
Catesby ap C. Jones
* Director July 25, 1994
-------------------------------
Olin B. King
* Director July 25, 1994
-------------------------------
H. Manning McPhillips, Jr.
* Director July 25, 1994
-------------------------------
Henry E. Simpson
* Director July 25, 1994
-------------------------------
Robert E. Steiner, III
* Director July 25, 1994
-------------------------------
Lee J. Styslinger, Jr.
/s/ RICHARD D. HORSLEY
* ------------------------------- July 25, 1994
Richard D. Horsley
As Attorney-In-Fact
pursuant to a
Power of Attorney
</TABLE>
<PAGE> 119
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- -------------------------------------------------------------------- ------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger dated as of April 21, 1994, by and between BNR Bancshares, Inc. and
Regions Financial Corporation (formerly First Alabama Bancshares, Inc.) -- included as Appendix A
to the Proxy Statement/Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation. (Previously filed)
4.2 -- By-laws of Regions Financial Corporation. (Previously filed)
5. -- Opinion re: legality.
8. -- Opinion re: tax matters.
23.1 -- Consent of Ernst & Young.
23.2 -- Consent of Hannis T. Bourgeois & Co. (Previously filed)
23.3 -- Consent of Chaffe & Associates, Inc.
23.4 -- Consent of Lange, Simpson, Robinson & Somerville -- included in Exhibit 5.
23.5 -- Consent of Alston & Bird -- included in Exhibit 8.
24. -- Power of Attorney -- the manually signed power of attorney is set forth in the signature page of
the registration statement.
99.1 -- Form of proxy.
99.2 -- Documents of BNR incorporated herein by reference, consisting of the Annual Report of BNR on Form 10-KSB, for the
fiscal year ended December 31, 1993, as amended, including that portion of BNR's Annual Report to
Stockholders incorporated by reference therein, the Quarterly Report of BNR on Form 10-Q for the quarter ended
March 31, 1994, and the Current Report of BNR on Form 8-K dated as of March 16, 1994.
</TABLE>
<PAGE> 1
EXHIBIT 5
LANGE, SIMPSON, ROBINSON & SOMERVILLE
ATTORNEYS & COUNSELORS
417 20TH STREET NORTH, SUITE 1700
BIRMINGHAM, ALABAMA 35203-3272
TELEPHONE (205) 250-5000
FACSIMILE (205) 250-5034
July 25, 1994
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Re: Regions Financial Corporation -- S-4 Registration
Statement, No. 33-54231
Ladies and Gentlemen:
We have acted as counsel for Regions Financial Corporation, a Delaware
corporation, ("Regions") in connection with the merger between BNR Bancshares,
Inc. ("BNR") and Regions (the "Merger") and in connection with the registration
of shares of common stock of Regions, par value $.625 per share ("Regions Common
Stock"), on Form S-4 under the Securities Act of 1933. The Merger provides for
issuance of shares of Regions Common Stock to the stockholders of BNR upon
consummation of the Merger. The number of shares of Regions Common Stock to be
issued in the Merger depends on the exchange ratio, which is defined in the
Agreement and Plan of Merger between Regions and BNR, dated as of April 21,
1994, but will not exceed 999,858 shares of Regions Common Stock.
We have examined and are familiar with the registration statement on
Form S-4 (33-54231) filed with the Securities and Exchange Commission, as such
registration statement has been amended to date. We have examined and are
familiar with the records relating to the organization of Regions and the
proceedings taken by its directors to date, and we have examined
<PAGE> 2
Regions Financial Corporation
July 25, 1994
Page 2
such other documents and records as we have deemed relevant for purposes of
rendering this opinion.
Based on the foregoing it is our opinion that upon satisfaction of the
conditions precedent to consummation of the Merger, or waiver of such
conditions capable of being waived, and upon consummation of the Merger, the
shares of Regions Common Stock issued pursuant to the Merger will be duly
authorized, validly issued and outstanding, fully paid and non-assessable, with
no personal liability attaching to the ownership thereof.
We hereby consent to the filing of this opinion as an exhibit to the
registration statement and to the reference to Lange, Simpson, Robinson &
Somerville under the caption "Opinions" in the proxy statement/prospectus
forming a part of the registration statement.
Very truly yours,
/s/ LANGE, SIMPSON, ROBINSON, & SOMERVILLE
<PAGE> 1
EXHIBIT 8
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-7777 Telex: 54-2996
Terence J. Greene Direct Dial (404) 881-7493
July 25, 1994
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
BNR Bancshares, Inc.
107 East Main Street
New Roads, Louisiana 70760
Re: PROPOSED MERGER OF BNR BANCSHARES, INC. WITH AND INTO
REGIONS FINANCIAL CORPORATION
Ladies and Gentlemen:
We have acted as special tax counsel to Regions Financial Corporation
("Regions"), a corporation organized and existing under the laws of the State
of Delaware, in connection with the proposed merger (the "Merger") of BNR
Bancshares, Inc. ("BNR"), a corporation organized and existing under the laws
of the State of Louisiana, with and into Regions. The Merger will be effected
pursuant to the Agreement and Plan of Merger, dated as of April 21, 1994, by
and between BNR and First Alabama Bancshares, Inc. (the "Merger Agreement");
after the signing of the Merger Agreement, First Alabama Bancshares, Inc.
changed its name to Regions Financial Corporation. For purposes of this
opinion and the Certificates of Representations related thereto, references to
Regions Financial Corporation or "Regions" are intended as references to the
corporation previously known as First Alabama Bancshares, Inc. In our capacity
as counsel to Regions, our opinion has been requested with respect to certain
of the federal income tax consequences of the proposed Merger.
In rendering this opinion, we have examined (i) the Internal Revenue
Code of 1986, as amended (the "Code") and Treasury Regulations, (ii) the
legislative history of applicable sections of the Code, and (iii) appropriate
Internal Revenue Service and court decisional authority. In addition, we have
relied upon certain information made known to us as more fully described below.
All capitalized terms used herein without definition shall have the respective
meanings specified in the Merger Agreement, and unless otherwise specified, all
section references herein are to the Code.
<PAGE> 2
Regions Financial Corporation
BNR Bancshares, Inc.
July 25, 1994
Page 2
INFORMATION RELIED UPON
In rendering the opinions expressed herein, we have examined such
documents as we have deemed appropriate, including:
(1) the Merger Agreement;
(2) the proxy statement/prospectus included in Regions'
Registration Statement on Form S-4, being filed with the Securities and
Exchange Commission with respect to the proposed transaction; and
(3) such additional documents as we have considered
relevant.
In our examination of such documents, we have assumed, with your
consent, that all documents submitted to us as photocopies faithfully reproduce
the originals thereof, that such originals are authentic, that all such
documents have been or will be duly executed to the extent required, and that
all statements set forth in such documents are accurate.
We have also obtained such additional information and representations
as we have deemed relevant and necessary through consultation with various
officers and representatives of Regions and BNR and through certificates
provided by the management of Regions and the management of BNR.
You have advised us that the proposed transaction will enable the
combined organization to realize certain economies of scale, yield a wider
array of banking and banking-related services to consumers and businesses, and
provide for a stronger market position and for greater financial resources to
meet competitive challenges within the New Roads, Louisiana market area. To
achieve these goals, the following will occur pursuant to the Merger Agreement:
(1) BNR will merge with and into Regions pursuant to the
General Corporation Law of Delaware and the Louisiana Business Corporation Law.
Regions will acquire all the assets and assume all the liabilities of BNR.
BNR's separate corporate existence will cease to exist, and Regions will be the
surviving corporation. Thereafter, Regions will continue to conduct its
business and will continue to operate the businesses of BNR conducted prior to
the Merger.
(2) Each share of BNR Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares as to which
dissenters' rights are duly exercised and except as provided below) shall, as
of the Effective Time, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive certificates
representing that number of shares of Regions Common Stock (the "Exchange
Ratio") equal to the quotient obtained by dividing (i) $79.70 by (ii) the
Average Closing Price; provided, however, that in the event the Average Closing
Price is (a) less than $26.00, the Exchange Ratio shall be 3.065, or (b)
greater than $36.00, the
-2-
<PAGE> 3
Regions Financial Corporation
BNR Bancshares, Inc.
July 25, 1994
Page 3
Exchange Ratio shall be 2.214 ($26.00 and $36.00 are collectively referred to
as the "Average Closing Price Limitations"). The Exchange Ratio is subject to
adjustment as provided in the Merger Agreement. At the Effective Time, any and
all shares of BNR Common Stock held by any BNR Company or any Regions Company
(in each case other than in a fiduciary capacity or as a result of debts
previously contracted) shall be canceled and retired, and no consideration
shall be paid in exchange therefor. In the event Regions or BNR changes the
number of shares of Regions Common Stock or BNR Common Stock, respectively,
issued and outstanding prior to the Effective Time as a result of a stock
split, stock dividend, or similar recapitalization, the number of shares of
Regions Common Stock into which shares of BNR Common Stock shall be converted
shall be equitably adjusted to reflect the effect of such stock split, stock
dividend, or similar recapitalization.
(3) No fractional shares of Regions Common Stock will be
issued as a result of the Merger. In lieu of the issuance of fractional
shares, cash adjustments (without interest) based upon the average of the
closing bid and ask quotations of such common stock on the last business day
preceding the Effective Time will be paid to the holders of BNR Common Stock in
respect of any fraction of a share of Regions Common Stock that would otherwise
be issuable. No such holder shall be entitled to dividends, voting rights, or
any other stockholder right in respect of any fractional share.
(4) Any holder of shares of BNR Common Stock who objects
to the Merger and who exercises his statutory dissenters' rights of appraisal
will be entitled to receive the value of such shares in cash calculated and
determined pursuant to the applicable provisions of the Louisiana Business
Corporation Law and shall not be entitled to receive the consideration
otherwise provided by the Merger Agreement.
With your consent, we have also assumed that the following statements
are true on the date hereof and will be true on the date the proposed
transaction is consummated:
(1) The fair market value of the Regions Common Stock and
other consideration received by the stockholders of BNR will be, in each
instance, approximately equal to the fair market value of the BNR Common Stock
surrendered in exchange therefor.
(2) There is no plan or intention on the part of the
stockholders of BNR who own one percent (1%) or more of the BNR stock, and to
the best of the knowledge of the management of BNR, there is no plan or
intention on the part of the remaining stockholders of BNR to sell, exchange or
otherwise dispose of a number of shares of Regions Common Stock to be received
in the proposed transaction that would reduce their holdings in Regions Common
Stock received to a number of shares having, in the aggregate a value as of the
Effective Time of less than fifty percent (50%) of the total value of all of
the stock of BNR outstanding immediately prior to the Effective Time. For
purposes of this representation, shares of BNR stock exchanged for cash or
other property, surrendered by dissenters or exchanged for cash in lieu of
fractional shares of Regions stock will be treated as outstanding BNR stock as
of the Effective Time. Moreover, shares of
-3-
<PAGE> 4
Regions Financial Corporation
BNR Bancshares, Inc.
July 25, 1994
Page 4
BNR stock and shares of Regions stock held by BNR stockholders and otherwise
sold, redeemed or disposed of prior or subsequent to the transaction will be
considered in making this representation.
(3) Regions has no plan or intention to reacquire any of
its stock issued in the transaction.
(4) Regions has no plan or intention to sell or otherwise
dispose of any of the assets of BNR acquired in the transaction, except for
dispositions made in the ordinary course of business or transfers described in
section 368(a)(2)(C).
(5) The liabilities of BNR assumed by Regions and the
liabilities to which the transferred assets of BNR are subject were incurred by
BNR in the ordinary course of its business.
(6) Following the transaction, Regions will continue the
historic business of BNR or use a significant portion of BNR's historic
business assets in a business.
(7) Regions, BNR, and the stockholders of BNR will pay
their respective expenses, if any, incurred in connection with the transaction.
(8) There is no intercorporate indebtedness existing
between BNR and Regions that was issued, acquired, or will be settled at a
discount.
(9) BNR is not under the jurisdiction of a court in a
case under Title 11 of the United States Code or a receivership, foreclosure,
or similar proceeding in a federal or state court.
(10) The fair market value and the total adjusted basis of
the assets of BNR transferred to Regions will each equal or exceed the sum of
the liabilities assumed by Regions plus the amount of the liabilities, if any,
to which the transferred assets are subject.
(11) The payment of cash in lieu of fractional shares of
Regions stock is solely for the purpose of avoiding the expense and
inconvenience to Regions of issuing fractional shares and does not represent
separately bargained for consideration. The total cash consideration that will
be paid in the transaction to the BNR stockholders instead of issuing
fractional shares of Regions stock will not exceed one percent (1%) of the
total consideration that will be issued in the transaction to the BNR
stockholders in exchange for their shares of BNR stock. The fractional share
interests of each BNR stockholder will be aggregated, and no BNR stockholder
will receive cash in an amount equal to or greater than the value of one full
share of Regions stock.
(12) None of the compensation received by any
stockholder-employees of BNR will be separate consideration for, or allocable
to, any of their shares of BNR stock; none of the shares of Regions stock
received by any stockholder-employees will be separate consideration for, or
allocable to, any employment agreement; and the compensation paid
-4-
<PAGE> 5
Regions Financial Corporation
BNR Bancshares, Inc.
July 25, 1994
Page 5
to any stockholder-employees will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services.
(13) At all times during the five-year period ending on
the effective date of the Merger, the fair market value of all of BNR's United
States real property interests was and will have been less than fifty percent
(50%) of the total fair market value of (a) its United States real property
interests, (b) its interests in real property located outside the United
States, and (c) its other assets used or held for use in a trade or business.
For purposes of the preceding sentence, (x) United States real property
interests include all interests (other than an interest solely as a creditor)
in real property and associated personal property (such as movable walls and
furnishings) located in the United States or the Virgin Islands and interests
in any corporation (other than a controlled corporation) owning any United
States real property interest, (y) BNR is treated as owning its proportionate
share (based on the relative fair market value of its ownership interest to all
ownership interests) of the assets owned by any controlled corporation or any
partnership, trust, or estate in which BNR is a partner or beneficiary, and (z)
any such entity in turn is treated as owning its proportionate share of the
assets owned by any controlled corporation or any partnership, trust, or estate
in which the entity is a partner or beneficiary. As used in this paragraph,
"controlled corporation" means any corporation at least fifty percent (50%) of
the fair market value of the stock of which is owned by BNR, in the case of a
first-tier subsidiary of BNR or by a controlled corporation, in the case of a
lower-tier subsidiary.
(14) For each of Regions and BNR, not more than twenty-five
percent (25%) of the fair market value of its adjusted total assets consists of
stock and securities of any one issuer, and not more than fifty percent (50%)
of the fair market value of its adjusted total assets consists of stock and
securities of five or fewer issuers. For purposes of the preceding sentence,
(a) a corporation's adjusted total assets exclude cash, cash items (including
accounts receivable and cash equivalents), and United States government
securities, (b) a corporation's adjusted total assets exclude stock and
securities issued by any subsidiary at least fifty percent (50%) of the voting
power or fifty percent (50%) of the total fair market value of the stock of
which is owned by the corporation, but the corporation is treated as owning
directly a ratable share (based on the percentage of the fair market value of
the subsidiary's stock owned by the corporation) of the assets owned by any
such subsidiary, and (c) all corporations that are members of the same
"controlled group" within the meaning of section 1563(a) of the
Code are treated as a single issuer.
(15) BNR has not filed, and holds no assets subject to, a
consent under section 341(f) of the Code and the regulations thereunder.
(16) BNR is not a party to, and holds no assets subject
to, a "safe harbor lease" under former section 168(f)(8) of the Code and the
regulations thereunder.
-5-
<PAGE> 6
Regions Financial Corporation
BNR Bancshares, Inc.
July 25, 1994
Page 6
(17) The Merger Agreement represents the entire
understanding of BNR and Regions with respect to the Merger.
OPINIONS
Based solely on the information submitted and the representations set
forth above and assuming that the Merger will take place as described in the
Merger Agreement and that the representations made by Regions and BNR (including
the representation that BNR stockholders will maintain sufficient equity
ownership interests in Regions after the Merger) are true and correct at the
time of the consummation of the Merger, we are of the opinion that:
(1) Provided the Merger qualifies as a statutory merger
under the General Corporation Law of Delaware and the Louisiana Business
Corporation Law, the Merger will be a reorganization within the meaning of
section 368(a)(1)(A). BNR and Regions will each be "a party to a
reorganization" within the meaning of section 368(b).
(2) BNR will recognize no gain or loss upon the transfer
of its assets to Regions in exchange solely for Regions Common Stock and the
assumption by Regions of the liabilities of BNR. Sections 361(a) and 357(a).
(3) No gain or loss will be recognized by Regions on
receipt of BNR's assets in exchange for Regions Common Stock. Section 1032(a).
(4) The basis of BNR's assets in the hands of Regions
will, in each case, be the same as the basis of those assets in the hands of BNR
immediately prior to the transaction. Section 362(b).
(5) The holding period of the assets of BNR in the hands
of Regions will, in each case, include the period during which such assets were
held by BNR. Section 1223(2).
(6) The stockholders of BNR will recognize no gain or
loss upon the exchange of their BNR Common Stock solely for shares of Regions
Common Stock. Section 354(a)(1).
(7) The basis of the Regions Common Stock received by
the BNR stockholders in the proposed transaction will, in each instance, be
the same as the basis of the BNR Common Stock surrendered in exchange
therefor. Section 358(a)(1).
(8) The holding period of the Regions Common Stock
received by the BNR stockholders will, in each instance, include the period
during which the BNR Common Stock surrendered in exchange therefor was held,
provided that the BNR Common Stock was held as a capital asset on the date of
the exchange. Section 1223(1).
-6-
<PAGE> 7
Regions Financial Corporation
BNR Bancshares, Inc.
July 25, 1994
Page 7
(9) The payment of cash to BNR stockholders in lieu of
fractional share interests of Regions Common Stock will be treated for federal
income tax purposes as if the fractional shares were distributed as part of the
exchange and then were redeemed by Regions. These cash payments will be
treated as having been received as distributions in full payment in exchange
for the stock redeemed as provided in section 302(a). Rev. Rul. 66-365,
1966-2 C.B. 116 and Rev. Proc. 77-41, 1977-2 C.B. 574.
(10) Where solely cash is received by a BNR stockholder in
exchange for his BNR Common Stock pursuant to the exercise of dissenters'
rights, such cash will be treated as having been received in redemption of his
BNR Common Stock, subject to the provisions and limitations of section 302.
The opinions expressed herein are based upon existing statutory,
regulatory, and judicial authority, any of which may be changed at any time
with retroactive effect. In addition, our opinions are based solely on the
documents that we have examined, the additional information that we have
obtained, and the statements set out herein, which we have assumed and you have
confirmed to be true on the date hereof and will be true on the date on which
the proposed transaction is consummated. Our opinions cannot be relied upon if
any of the facts contained in such documents or if such additional information
is, or later becomes, inaccurate, or if any of the statements set out herein
is, or later becomes, inaccurate. Finally, our opinions are limited to the tax
matters specifically covered thereby, and we have not been asked to address,
nor have we addressed, any other tax consequences of the proposed transaction.
We consent to this opinion as an exhibit to the Registration Statement
filed by Regions relating to the proposed Merger and to the references to our
firm in the proxy statement/prospectus included in the Registration Statement.
This opinion is being provided solely for the use of Regions, BNR and their
stockholders. No other person or party shall be entitled to rely on this
opinion.
Very truly yours,
ALSTON & BIRD
By: /s/ TERENCE J. GREENE
-----------------------------
Terence J. Greene
-7-
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Regions Financial
Corporation for the registration of up to 999,858 shares of its common stock
and to the incorporation by reference therein of our report dated February 4,
1994, with respect to the consolidated financial statements of Regions
Financial Corporation (formerly First Alabama Bancshares, Inc.) included in its
Annual Report to Stockholders which is incorporated by reference in its Annual
Report (Form 10-K) for the year ended December 31, 1993, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young
Birmingham, Alabama
July 22, 1994
<PAGE> 1
EXHIBIT 23.3
Consent of the Chaffe & Associates, Inc.
We consent to the inclusion in this Registration Statement on Form S-4
of our opinion, to be dated July 26, 1994, set forth as Appendix B to the Proxy
Statement/Prospectus and to the summarization thereof in the Proxy
Statement/Prospectus under the caption "Description of the Transaction". In
giving such consent, we do not thereby admit that we come within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933 or the Rules and Regulations of the Securities and Exchange Commission
thereunder.
CHAFFE & ASSOCIATES, INC.
By: /s/ G. F. Gay LeBreton
-----------------------
G. F. Gay LeBreton
Vice President
New Orleans, Louisiana
July 25, 1994
<PAGE> 1
BNR BANCSHARES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned shareholder of BNR BANCSHARES, INC. (the "Company"), a
Louisiana corporation, hereby appoints James M. Bouanchaud, John L. Crosby,
Curtis P. Fremin, Frank J. Greely, Jr., Percy V. Rougon and Charles R. Smith,
and each of them, proxies with power of substitution to vote and act for the
undersigned, as designated below, with respect to the number of shares of Common
Stock the undersigned would be entitled to vote if personally present at the
Special Meeting of Stockholders of the Company, which will be held at the
Company's main office, 107 East Main Street, New Roads, Louisiana 70760, on
August 26, 1994, at 10:00 a.m. (the "Special Meeting"), and at any adjournments
or postponements thereof, and, at their discretion, the proxies are authorized
to vote upon such other business as may properly come before the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED HEREIN BY THE
STOCKHOLDER. IF NO DIRECTION IS SPECIFIED WHEN THE DULY EXECUTED PROXY IS
RETURNED, SUCH SHARES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF THE
BOARD OF DIRECTORS OF THE COMPANY.
The Board of Directors of the Company recommends that you vote FOR approval
of the Merger of the Company with and into Regions Financial Corporation.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
PLEASE MARK YOUR CHOICE LIKE THIS /X/ IN BLUE OR BLACK INK
Item 1: Approval of the Merger of the Company with and into Regions Financial
Corporation and of the related Agreement and Plan of Merger dated as of
April 21, 1994, between the Company and Regions Financial Corporation.
FOR / / AGAINST / / ABSTAIN / /
The undersigned hereby acknowledges receipt of a copy of the accompanying
Notice of Special Meeting of Stockholders and Proxy Statement/Prospectus and
hereby revokes any proxy or proxies heretofore given.
Date
------------------------------
----------------------------------
Signature
Please mark, date and sign as your
account name appears and return in
the enclosed envelope. If acting as
executor, administrator, trustee,
guardian or in a similar capacity,
you should so indicate when
signing. If the person signing is a
corporation, partnership or other
entity, please sign the full name
of the corporation, partnership or
other entity by a duly authorized
officer, partner or other person.
If the shares are held jointly,
each stockholder named should sign.
<PAGE> 1
EXHIBIT 99.2
DOCUMENTS OF BNR BANCSHARES, INC. INCORPORATED BY REFERENCE:
1. Annual Report on Form 10-KSB for the fiscal year ended December 31,
1993, as amended, including audited financial statements incorporated
by reference therein from Annual Report to Stockholders.
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1994.
3. Current Report on Form 8-K dated as of March 16, 1994.
<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
10-KSB
Annual Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934 for the
Fiscal Year Ended December 31, 1993
BNR Bancshares, Inc. 0-11782
(Exact name of registrant as specified in its charter) (Comm. File No.)
Louisiana 72-0954582
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
107 East Main Street
P. O. Box 250
New Roads, Louisiana 70760
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (504) 638-3791
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $10.00 Par Value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive Proxy or
information statements incorporated by reference in Part III of this Form
10-KSB, or any amendment to this Form 10-KSB. X
---
State issuer's revenues for its most recent fiscal year. $10,131,339
State the aggregate market value of the voting stock held by
non-affiliates* of the registrant as of January 31, 1994: $15,094,847 (275,102
Shares @ $54.87 per Share)
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock $10 Par Value, 326,218 shares outstanding as of March 31, 1994.
<PAGE> 3
Documents Incorporated by Reference
Document Part of Form 10-K
-------- -----------------
Annual Report for Fiscal Year Ended Part I and Part II
December 31, 1993
*For purposes of the computation, shares owned by executive officers,
directors and 5% shareholders have been excluded.
<PAGE> 4
10-KSB Index
Part I
<TABLE>
<S> <C> <C>
Item 1 Description of Business.................................... 1
Supplemental Financial Information:
Average Balance Sheets and Interest Yield Analysis....... 6
Interest Differential.................................... 7
Investment Portfolio..................................... 8
Loan Portfolio........................................... 9
Non-Performing Loans..................................... 10
Summary of Loan Loss Experience.......................... 11
Deposits................................................. 12
Return on Equity and Assets.............................. 13
Item 2 Description of Properties.................................. 13
Item 3 Legal Proceedings.......................................... 14
Item 4 Submission of Matters to a Vote of Security Holders........ 14
Part II
Item 5 Market for the Registrant's Common Stock and Related
Security Holder Matters.................................. 15
Item 6 Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 16
Item 7 Financial Statements and Supplementary Data................ 26
Item 8 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure...................... 26
Part III
Item 9 Directors and Executive Officers of the Registrant......... 27
Item 10 Director and Executive Compensation........................ 30
Item 11 Security Ownership of Certain Beneficial Owners
and Management........................................... 31
Item 12 Certain Relationships and Related Transactions............. 33
Part IV
Item 13 Exhibits, Financial Statement Schedules and Reports
on Form 8-K.............................................. 34
Signatures................................................. 35
</TABLE>
<PAGE> 5
Part I
Item 1. Business
The Registrant
BNR Bancshares, Inc., a Louisiana Corporation, (the "Corporation")
was incorporated on March 17, 1982. At the annual meeting on May 4, 1982, the
stockholders of the Bank of New Roads (the "Bank") approved a Merger Agreement
by and among the Bank, the Corporation, and BNR Bank, an interim bank formed
for the purpose of this transaction. On December 29, 1982, pursuant to the
Merger Agreement, BNR Bank merged with and into the Bank with the Bank as the
surviving bank and with stockholders of the Bank becoming shareholders of the
Corporation on a share-for-share basis and the Corporation becoming the owner
of all of the outstanding stock of the Bank. The reorganization was accounted
for as a pooling-of-interest. The Corporation had no material transactions
prior to December 29, 1982. The Corporation accounts for its investment in the
Bank on the consolidated basis of accounting. The Bank is the Corporation's
principal asset and primary source of revenue.
Proposed Merger
On March 16, 1994, the Corporation entered into a nonbinding letter
of intent and a memorandum of understanding (the "Letter) with First Alabama
Bancshares, Inc. ("First Alabama"), a bank holding company with its principal
office in Birmingham, Alabama, pursuant to which the Corporation will merge
with and into First Alabama and the Bank will become a wholly owned subsidiary
of First Alabama. The proposed merger is subject to various conditions,
including the negotiation and execution of a definitive agreement, approval
thereof by the Board of Directors and shareholders of the Corporation and by
certain regulatory agencies. The Letter contemplates that the shareholders of
the Corporation will receive for each share of the Corporation's Common Stock
held by them shares of First Alabama common stock valued at $26,000,000.00,
subject to adjustment under certain circumstances. If the merger is
consummated, the Bank is expected to continue to be operated by current
management of the Bank as a first tier subsidiary of First Alabama until
combined with other banking subsidiaries of First Alabama operating in
Louisiana.
The Bank
The Bank of New Roads was incorporated under the laws of the State
of Louisiana on October 2, 1899. The Bank's securities consist of one class,
common stock, of which all of the 168,750 outstanding shares were held by its
parent, the Corporation as of December 31, 1993.
The Bank presently has a main office at 107 East Main Street, New
Roads, Pointe Coupee Parish, Louisiana, and five branch offices. One branch is
located in Morganza, Pointe Coupee Parish, Louisiana; the second branch on
Hospital Road, New Roads, Pointe Coupee Parish, Louisiana; the third branch in
Lakeland, Pointe Coupee Parish, Louisiana; the fourth branch in Livonia, Pointe
Coupee Parish, Louisiana; and the fifth branch in Baton Rouge, E. Baton Rouge
Parish, Louisiana. These branches were approved on May 9, 1964; February 19,
1974; March 28, 1977; November 19, 1981; and August 4, 1992, respectively, by
the Commissioner of Financial Institutions of the State of Louisiana and the
Federal Deposit Insurance Corporation.
1
<PAGE> 6
The Bank conducts primarily the same business operations as a
typical independent commercial bank, with special emphasis in retail banking,
including the acceptance of checking and savings deposits, and the making of
commercial, real estate, personal, home improvement, automobile and other
installment and term loans. In May of 1980 the Bank amended its charter and
began a trust department. As of December 31, 1993, the bank has no trust
agreements. It also offers, among other services, travelers' cheques, safe
deposit boxes, note collection escrow and other customary bank services to its
customers. In addition, the Bank offers drive-up services. The Bank of New
Roads is insured under the Federal Deposit Insurance Act; but like most state
chartered banks of its size in Louisiana, it is not a member of the Federal
Reserve System.
The three main areas in which the Bank has directed its lendable
assets are (1) real estate loans; (2) loans to individuals for household,
family and other consumer expenditures; and (3) loans for commercial,
financial and agricultural purposes. As of December 31, 1993, these three
categories accounted for approximately 63%, 13% and 24%, respectively, of the
Bank's loan portfolio.
With the exception of the deposits of municipalities and other
governmental agencies mentioned below, the Bank's deposits are attracted
primarily from individuals and small business-related sources whose average
deposit balances are relatively small. This tends to reduce the potential for
the loss of a substantial amount of deposits by the withdrawal of a relatively
small number of depositors. In addition to these small deposits, however, the
Bank holds substantial amounts of deposits from several municipalities and
other governmental agencies. The deposit balances of all states and
municipalities, were $20,663,000 at December 31, 1993. Consequently, these
depositors are considered by management to be of material importance to the
Bank. Management has no reason to believe that these deposit balances will
substantially decrease. In connection with the deposits of municipalities and
other governmental agencies and entities, the Bank is generally required to
pledge securities to secure such deposits (except for the first $100,000 of
such deposits, which is insured by the Federal Deposit Insurance Corporation).
As of December 31, 1993, the Bank had a total of 2,958 accounts
representing demand deposits with a balance of $9,180,828; 1,895 Now accounts
with a balance of $36,553,267; 567 money market accounts with a balance of
$13,522,451; 2,473 savings accounts with a balance of $9,302,409; 2,355 time
deposit accounts with a balance of $50,910,080. There are no securities held
by the Bank that are subject to repurchase agreements.
The Bank holds no patents, registered trademarks, licenses (other
than licenses required to be obtained from appropriate bank regulatory
agencies), franchises or concessions. There has been no significant change in
the kinds of services offered by the Bank during the last three fiscal years.
The Bank has not engaged in any research activities relating to the
development of new services or the improvement of existing services except in
the normal course of business activities. The Bank presently has no plans for
2
<PAGE> 7
any new line of business requiring the investment of a material amount to total
assets.
Most of the Bank's business originates from within Pointe Coupee
and E. Baton Rouge Parishes, Louisiana; however, some business is obtained from
contiguous parishes. There has been no material effect upon the Bank's capital
expenditures, earnings, or competitive position as a result of federal, state,
or local environmental regulations.
Competition
The banking business in Louisiana, and specifically in the market
areas served by the Bank of New Roads, is highly competitive with respect to
both loans and deposits. The Bank competes for deposits principally with
other commercial banks, savings and loan associations, and credit unions. In
addition, other entities (both governmental and private industry) seeking to
raise capital through the issuance and sale of debt and equity securities, also
provide competition for the Bank of New Roads in the acquisition of deposits.
With regard to loans, Bank of New Roads competes with banks, savings
and loan associations, insurance companies, mortgage companies, and other
lending institutions, including credit unions.
Recently enacted federal legislation has broadened significantly the
powers of savings and loan institutions with the result that such institutions
may now engage in certain activities formerly permitted only to banks. The
Bank has experienced no major effects from this legislation at this time.
In the Bank's primary market area, there are two other banks
aggressively pursuing loans, deposits and other accounts. Below is a list of
Pointe Coupee Parish banks with their total deposits and assets as of December
31, 1993.
<TABLE>
<CAPTION>
Name Deposits Assets
---- -------- ------
<S> <C> <C>
Bank of New Roads $119,469,000 $136,718,000
Team Bank and Trust Co. 39,875,000 43,503,000
Peoples Bank and Trust Co. 29,289,000 32,809,000
</TABLE>
Employees
The Bank has approximately 62 full time employees. Management
considers its relationship with the employees to be good.
Supervision and Regulation
The Bank is subject to regulation and regular examination by the
Federal Deposit Insurance Corporation. Applicable regulations relate to
reserves, investments, loans, issuance of securities, the level of capital,
establishment of branches and other aspects of its operations. The Federal
Deposit Insurance Corporation may initiate sanctions and other administrative
proceedings for failure to comply with current regulations and may cease
deposit insurance.
3
<PAGE> 8
The Corporation is a bank holding company within the meaning of the
Bank Holding Company Act of 1956 (the "Act"), as amended, and is thereby
subject to the provisions of the Act and to regulation by the Board of
Governors of the Federal Reserve System (the "Board").
The Act requires the Corporation to file with the Board an annual
report containing such information as the Board may require. The Board is
authorized by the Act to examine the Corporation and all of its activities.
The activities that may be engaged in by the Corporation and its subsidiaries
are limited by the Act to those so closely related to banking, managing or
controlling banks as to be a proper incident thereto. In determining whether a
particular activity is a proper incident to banking, managing or controlling
banks, the Board must consider whether its performance by an affiliate of a
holding company can reasonably be expected to produce benefits to the public,
such as greater convenience, increased competition, or gains in efficiency that
outweigh possible adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest, or unsound banking
practices.
The Board has adopted regulations implementing the provisions of the
Act with respect to the activities of bank holding companies. Such regulations
reflect a determination by the Board that the following activities are
permissible for bank holding companies: (1) making, for its own account or for
the account of others, loans such as would be made, for example, by a mortgage,
finance or factoring company; (2) operating as an industrial bank; (3)
servicing loans; (4) acting as a fiduciary; (5) acting as an investment or
financial adviser, including acting in such capacity for a mortgage investment
trust or real estate investment trust; (6) leasing personal or real property,
where the lease is to serve as the functional equivalent of an extension of
credit to the lessee of the property; (7) investing in community welfare
corporations or projects; (8) providing bookkeeping and data processing
services for a bank holding company and its subsidiaries, or storing and
processing certain other banking, financial, or related economic data; (9)
acting as an insurance agent, principally insurance issued in connection with
extensions of credit by the holding company or any of its subsidiaries; (10)
underwriting credit life and credit accident and health insurance related to
extensions of credit; (11) providing courier services for documents and papers
related to banking transactions; (12) providing management consulting, advice
to non-affiliated banks; (13) selling money orders, travelers cheques and U.S.
Savings Bonds; (14) performing real estate appraisals; (15) arranging
commercial real estate equity financing; (16) conducting securities brokerage
and margin lending activities; (17) underwriting and dealing in government
obligations, including certain money market instruments; (18) providing foreign
exchange advice and transactional services; and (19) acting as futures
commission merchants. In each case, the Corporation must secure the approval
of the Board prior to engaging in any of these activities.
Whether or not a particular non-banking activity is permitted under
the Act, the Board is authorized to require a holding company to terminate any
activity or divest itself of any non-banking subsidiary if in its judgment the
activity or subsidiaries would be unsound.
4
<PAGE> 9
Under the Act and the Board's regulations, a bank holding company
and its subsidiaries are prohibited from engaging in certain tie-in
arrangements in connection with any extension of credit or provision of any
property or services.
In addition to the limitations of Louisiana law with respect to the
ownership of banks, as described below, the ownership or control of voting
shares of a second bank by a bank holding company such as the Corporation is
restricted by the Act unless the prior approval of the Board is obtained. The
Act prohibits the Board from approving an application from a bank holding
company to acquire shares of a bank located outside the state in which the
operations of the holding company's subsidiaries are principally conducted,
unless such an acquisition is specifically authorized by statute of the state
in which the bank whose shares are to be acquired is located.
Under the Louisiana Bank Holding Company Act of 1962, as amended
(the "Louisiana Act"), one-bank holding companies are authorized to operate in
Louisiana provided the activities of the non-banking subsidiaries are limited
to the ownership of real estate and improvements, computer services, equipment
leasing and other directly related banking activities. The Louisiana Act, as
amended in 1984, authorizes multi-bank holding companies within the state.
Louisiana Bank Holding Companies are permitted to acquire out-of-state banks
and banks and bank holding companies, and out-of-state banks and bank holding
companies are permitted to acquire Louisiana banks and bank holding companies.
The State Commissioner of Financial Institutions is authorized to administer
the Louisiana Act by the issuance of orders and regulations.
Also during 1986, the Louisiana Legislature enacted a law allowing
Louisiana banks to acquire banks within other parishes and operate them as
branches.
Statistical Information
The following data contains information concerning the business and
operations of the Corporation and its subsidiary. This information should be
read in conjunction with the Financial Statements and Management's Discussions
and Analysis of Financial Condition and Results of Operations.
5
<PAGE> 10
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY:
AVERAGE BALANCES AND INTEREST RATES
For the years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992
----------------------------------- -----------------------------------
AVERAGE INTEREST AVERAGE INTEREST
ASSETS: BALANCE INTEREST RATE BALANCE INTEREST RATE
- ------- ------------- ----------- --------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Earning Assets:
Interest Bearing Deposits in Other Banks $ - $ 42 - % $ - $ 129 - %
Federal Funds Sold and Securities Purchased
under Resale Agreements 3,617,739 102,566 2.84 2,890,977 98,147 3.39
Investment Securities:
Taxable 57,336,597 3,595,376 6.27 55,793,534 3,884,865 6.96
Non-Taxable(1) 1,096,163 84,220 7.68 1,085,947 110,854 10.21
Loans - Net(2)(3) 66,440,847 6,384,016 9.61 62,248,468 6,420,514 10.31
----------- ---------- ----- ----------- ---------- -----
Total Earning Assets $128,491,346 $10,166,220 7.91% $122,018,926 $10,514,509 8.62%
Allowance for Loans Losses (753,152) (685,300)
Non-Earning Assets 11,176,931 10,865,255
----------- -----------
TOTAL ASSETS $138,915,125 $132,198,881
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Interest Bearing Liabilities:
Savings and Now Accounts $ 46,620,872 $ 1,078,485 2.31% $ 38,501,740 $ 1,097,556 2.85%
Insured Money Market Accounts and
Certificates of Deposit 66,099,629 2,271,326 3.44 68,802,254 2,888,416 4.20
Federal Funds Purchased and Securities
Sold under Repurchase Agreements 32,877 1,010 3.07 41,277 1,335 3.23
----------- ---------- ----- ----------- ---------- -----
Total Interest Bearing Liabilities $112,753,378 $ 3,350,821 2.97% $107,345,271 $ 3,987,307 3.71%
---------- ----- ---------- -----
Non-Interest Bearing Demand Deposits 9,264,788 9,614,707
Other Liabilities 2,155,334 2,040,272
----------- -----------
TOTAL LIABILITIES $124,173,500 $119,000,250
Stockholders' Equity 14,741,625 13,198,631
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $138,915,125 $132,198,881
=========== ===========
Net Interest Income - Tax Equivalent Basis $ 6,815,399 $ 6,527,202
Tax Equivalent adjustment(1) (34,881) (35,443)
---------- ----------
Net Interest Income $ 6,780,518 $ 6,491,759
========== ==========
Interest Spread(1) 4.94% 4.90%
===== =====
Net Interest Income as a % of Total Earning Assets(1) 5.30% 5.35%
===== =====
<CAPTION>
1991
----------------------------------
AVERAGE INTEREST
ASSETS: BALANCE INTEREST RATE
- ------- ------------- ----------- --------
<S> <C> <C> <C>
Earning Assets:
Interest Bearing Deposits in Other Banks $ 516,571 $ 38,545 7.47%
Federal Funds Sold and Securities Purchased
under Resale Agreements 7,254,830 403,041 5.56
Investment Securities:
Taxable 52,254,459 4,355,934 8.34
Non-Taxable(1) 4,681,256 393,052 8.40
Loans - Net(2)(3) 55,956,777 6,181,708 11.05
----------- ---------- -----
Total Earning Assets $120,663,893 $11,372,280 9.43%
Allowance for Loans Losses (686,346)
Non-Earning Assets 10,672,500
-----------
TOTAL ASSETS $130,650,047
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Interest Bearing Liabilities:
Savings and Now Accounts $ 35,078,111 $ 1,604,050 4.58%
Insured Money Market Accounts and
Certificates of Deposit 72,718,268 4,391,129 6.04
Federal Funds Purchased and Securities
Sold under Repurchase Agreements 0 0 -
----------- ---------- -----
Total Interest Bearing Liabilities $107,796,379 $ 5,995,179 5.57%
---------- -----
Non-Interest Bearing Demand Deposits 9,002,373
Other Liabilities 1,817,443
-----------
TOTAL LIABILITIES $118,616,195
Stockholders' Equity 12,033,852
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $130,650,047
===========
Net Interest Income - Tax Equivalent Basis $ 5,377,101
Tax Equivalent adjustment(1) (127,292)
----------
Net Interest Income $ 5,249,809
==========
Interest Spread(1) 3.86%
=====
Net Interest Income as a % of Total Earning Assets(1) 4.46%
=====
</TABLE>
(1) Tax Equivalent Basis - 34% 1993, 34% 1992, and 34% 1991
(2) Balances include non-performing loans
(3) Interest Income includes loan fees of $490,177, $386,729, and $210,817 for
1993, 1992 and 1991
6
<PAGE> 11
INTEREST DIFFERENTIAL
For the years ended December 31, 1993 and 1992
<TABLE>
<CAPTION>
1993 OVER 1992
----------------------------------------
CHANGE
ATTRIBUTABLE TO TOTAL
-------------------------- INCREASE
VOLUME RATE (DECREASE)
------------ ------------ ------------
<S> <C> <C> <C>
Interest Earning Assets:
Time Deposits with Banks $ (44) $ (43) $ (87)
Federal Funds Sold 22,478 (18,059) 4,419
Investment Securities:
Taxable 101,442 (390,931) (289,489)
Non-Taxable(1) 942 (27,576) (26,634)
Loans 415,738 (452,236) (36,498)
---------- ---------- ----------
Total Interest Income $ 540,556 $ (888,845) $ (348,289)
---------- ---------- ----------
Interest Bearing Liabilities:
Savings and Now Accounts $ 210,117 $ (229,188) $ (19,071)
Insured Money Market Accounts and
Certificates of Deposit (361,860) (255,230) (617,090)
Federal Funds Purchased (469) 144 (325)
---------- ---------- ----------
Total Interest Expense $ (152,212) $ (484,274) $ (636,486)
---------- ---------- ----------
Net Interest Income $ 692,768 $ (404,571) $ 288,197
========== ========== ==========
<CAPTION>
1992 OVER 1991
----------------------------------------
CHANGE
ATTRIBUTABLE TO TOTAL
-------------------------- INCREASE
VOLUME RATE (DECREASE)
------------ ------------ ------------
<S> <C> <C> <C>
Interest Earning Assets:
Time Deposits with Banks $ (24,141) $ (14,275) $ (38,416)
Federal Funds Sold (195,047) (109,847) (304,894)
Investment Securities:
Taxable 272,601 (743,670) (471,069)
Non-Taxable(1) (334,467) 52,269 (282,198)
Loans 674,059 (435,253) 238,806
----------- ---------- ----------
Total Interest Income $ 393,005 $(1,250,776) $ (857,771)
---------- ---------- ----------
Interest Bearing Liabilities:
Savings and Now Accounts $ 128,580 $ (635,074) $ (506,494)
Insured Money Market Accounts and
Certificates of Deposit (200,612) (1,302,101) (1,502,713)
Federal Funds Purchased 668 667 1,335
---------- ---------- ---------
Total Interest Expense $ (71,364) $(1,936,508) $(2,007,872)
---------- ---------- ----------
Net Interest Income $ 464,369 $ 685,732 $ 1,150,101
========== ========== ==========
</TABLE>
(1) Tax Equivalent Basis - 34% 1993, 34% 1992 and 34% 1991
Note: The change in interest due to both volume and rate changes
has been allocated equally between volume and rate.
7
<PAGE> 12
Investment Portfolio
The following tables show the year end composition of securities held
to maturity, the carrying and approximate market values, and the weighted
average yield at December 31, 1993 and 1992:
<TABLE>
<CAPTION>
UNREALIZED
CARRYING MARKET ------------------- WEIGHTED AVERAGE
VALUE VALUE GAINS (LOSS) YIELD
-------- ------ ----- ------ --------
<S> <C> <C> <C> <C> <C>
December 31, 1993:
Securities of Other U. S.
Government Agencies $17,543,802 $18,253,379 $ 709,682 $ (105) 6.59%
Obligations of State and
Political Subdivisions 1,368,877 1,442,827 73,950 (0) 4.68%
Other Securities 3,067,343 3,063,506 11,735 (15,572) 11.27%
---------- ---------- --------- --------- -----
Total $21,980,022 $22,759,712 $ 795,367 $ (15,677) 6.34%
========== ========== ========= ========= =====
December 31, 1992:
Securities of Other U. S.
Government Agencies $50,211,937 $51,068,107 $ 961,660 $ (105,490) 7.36%
Obligations of State and
Political Subdivisions 216,884 216,160 302 (1,026) 6.45%
Other Securities 9,740,552 9,777,191 81,906 (45,267) 8.60%
---------- ---------- --------- --------- -----
Total $60,169,373 $61,061,458 $1,043,868 $ (151,783) 7.61%
========== ========== ========= ========= =====
</TABLE>
The following table shows the maturities of investment securities
being held to maturity at December 31, 1993, and the weighted average yields of
such securities.
<TABLE>
<CAPTION>
(in thousands) Securities Maturing
- ------------------------------------------------------------------------------------------------------------------------------------
After One After Five
Within But Within But Within After
One Year Five Years Ten Years Ten Years
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Yield Amount Yield Amount Yield Amount Yield
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities of Other U.S.
Government Agencies $ 0 0 $10,673 6.38% $6,170 6.62% $ 701 9.60%
Obligations of State and
Political Subdivisions 0 0 504 4.25 865 4.93 0 0
Other Securities 0 0 0 0 998 5.15 2,069 5.38
----- - ------ ---- ----- ---- ----- ----
Total $ 0 0 $11,177 6.28% $8,033 6.26% $2,770 6.45%
===== = ====== ==== ===== ==== ===== ====
</TABLE>
The following table shows the year end composition of securities
available for sale, the carrying and approximate market values, and the
weighted average yield at December 31, 1993:
<TABLE>
<CAPTION>
UNREALIZED
AMORTIZED MARKET ------------------- WEIGHTED AVERAGE
COST VALUE GAINS (LOSS) YIELD
-------- ------ ----- ------ --------
<S> <C> <C> <C> <C> <C>
December 31, 1993:
Securities of Other U.S.
Government Agencies $24,864,740 $25,247,189 $ 384,224 $ (1,775) 5.56%
Other Securities 9,678,282 9,625,370 7,493 (60,405) 5.96%
---------- ---------- --------- -------- -----
Total $34,543,022 $34,872,559 $ 391,717 $ (62,180) 5.68%
========== ========== ========= ======== =====
</TABLE>
8
<PAGE> 13
The following table shows the maturities of investment securities
available for sale at December 31, 1993, and the weighted average yields of
such securities.
<TABLE>
<CAPTION>
(in thousands) Securities Maturing
- -----------------------------------------------------------------------------------------------------------------------------------
After One After Five
Within But Within But Within After
One Year Five Years Ten Years Ten Years
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Yield Amount Yield Amount Yield Amount Yield
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities of Other U.S.
Government Agencies $12,016 5.03% $8,058 5.41% $ 707 10.04% $ 4,084 6.63%
Obligations of State and
Political Subdivisions 0 0 0 0 0 0 0 0
Other Securities 0 0 0 0 2,053 6.69 7,625 5.78
------ - ----- ---- ----- ----- ------ ----
Total $12,016 5.03% $8,058 5.41% $2,760 7.55% $11,709 6.08%
====== ==== ===== ==== ===== ===== ====== ====
*Tax Equivalent Basis - 34% 1993, 34% 1992
</TABLE>
Below is a summary of the securities held by the Corporation at
December 31, 1993, that exceeded, in aggregate by issuer, 10% of Stockholders'
Equity.
None
LOAN PORTFOLIO
An analysis of the loan portfolio at December 31, 1993 and 1992, is as
follows:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Real Estate Loans - Construction $ 734,356 $ 310,559
Real Estate Loans - Mortgage 40,445,911 38,173,659
Loans to Financial Institutions - -
Commercial, Financial and Agricultural 15,392,462 16,333,646
Individual and Others 8,284,814 8,533,256
---------- ----------
Total Loans $64,857,543 $63,351,120
Unearned Income (115,124) (102,914)
Allowance for Loan Losses (833,902) (708,207)
---------- ----------
$63,908,517 $62,539,999
========== ==========
</TABLE>
9
<PAGE> 14
The amounts of total gross loans (excluding residential mortgages on 1-4 family
residences and consumer loans) outstanding at December 31, 1993, based on
remaining scheduled repayments of principal, due in (1) one year or less, (2)
more than one year but less than five years and (3) more than five years, are
shown in the following table. The amounts due after one year are classified
according to sensitivity to changes in interest rates.
<TABLE>
<CAPTION>
Loans Maturing
- -----------------------------------------------------------------------------------------------------------------------------------
Within After One But After
One Year Within Five Years Five Years Total
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial, Financial and Agricultural $4,928,060 $6,041,363 $4,423,040 $15,392,463
Real Estate - Construction 692,246 42,110 - 734,356
--------- --------- --------- ----------
Total $5,620,306 $6,083,473 $4,423,040 $16,126,819
========= ========= ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Sensitivity to Changes in Interest Rates
- -----------------------------------------------------------------------------------------------------------------------------------
Predetermined Variable
Rate Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Due after one year but within five years $2,988,039 $3,095,434
Due after five years 1,484,633 2,938,407
--------- ---------
$4,472,672 $6,033,841
========= =========
</TABLE>
NON-PERFORMING LOANS
Non-performing loans consist of loans placed on non-accrual of
interest status and renegotiated loans that are not on non-accrual. It is the
policy of the Bank to automatically place loans on non-accrual of interest
status when the loan becomes past due as to principal or interest payments for
90 days. Student loans, which are government guaranteed, are not placed on
non-accrual status. When a loan is placed on non-accrual status, interest
accrued but not collected is usually reversed against interest income.
Payments received on non-accrual loans are generally applied to principal
first. Loans are not reclassified as accruing until interest and principal
payments are brought current and future payments are reasonably assured.
The following table presents information on the amount of
non-performing loans at December 31, 1993 and 1992:
1993 1992
---- ----
Loans accounted for on a non-accrual basis $1,286,331 $662,529
Loans contractually past due ninety days or
more as to principal or interest 37,215 26,468
Loans whose terms have been renegoatiated to
provide a reduction or deferral of interest or
principal due to a deterioration in the
financial position of the borrower 116,005 118,284
Loans now current where there are serious doubts
as to the ability of the borrower to comply
with present loan repayment terms - -
--------- -------
$1,439,551 $807,281
========= =======
10
<PAGE> 15
The Bank recognized $40,077 and $22,908 in interest income during the years
ended December 31, 1993 and 1992, relating to the above non-accrual loans. Had
these loans been performing, approximately $130,828 and $67,547 of additional
interest income, or a total of $170,905 and $90,455 would have been recognized
in 1993 and 1992, respectively.
The Bank has additional loans on an accrual basis which have been
classified for regulatory purposes as special mention, substandard or doubtful.
The classification of these loans does not result from trends or uncertainties
which would have a material impact on future operating results. Also,
management is not aware of any information which causes management to have
serious doubts as to the ability of these borrowers to comply with the loan
repayment terms.
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes the allowance for loan losses:
Year Ended December 31,
---------------------------
1993 1992
---- ----
Amount of loans Outstanding at End of Period $64,742,419 $63,248,206
========== ==========
Daily Average Amount of Loans $66,440,847 $62,248,468
========== ==========
Balance of Allowance for Loan Losses at
Beginning of Period $ 708,207 $ 678,242
Loans Charged Off: Commercial, Financial,
and Agricultural $ 69,075 $ 92,144
Real Estate - Construction - -
Real Estate - Mortgage 13,350 52,973
Individual & Other 118,401 78,547
---------- ----------
Total Charge-Offs $ 200,826 $ 223,664
---------- ----------
Recoveries of Loans previously charged-off:
Commercial, Financial, and Agricultural $ 44,427 $ 62,952
Real Estate - Construction - -
Real Estate - Mortgage 17,946 9,637
Individual & Other 44,148 41,040
---------- ----------
Total Recoveries $ 106,521 $ 113,629
---------- ----------
Net Loans Charged Off $ 94,305 $ 110,035
Additions to Allowance Charged to Expense 220,000 140,000
---------- ----------
Balance at End of Period $ 833,902 $ 708,207
========== ==========
Ratio of Net Charge-Offs to Total Loans
Outstanding .15% .17%
===== =====
Ratio of Net Charge-Offs to Average Loans
Outstanding .14% .18%
===== =====
The provision for loan losses charged to operating expense represents an
amount based on past loan loss experience and the quality of the loan
portfolio. Additional amounts are added based on management's evaluation of
current and anticipated economic conditions and their effect on the market
served by the Company. The allowance for loan losses reflects an amount which,
in management's judgment, is adequate to absorb potential loan losses.
11
<PAGE> 16
The allowance for possible loan losses has been allocated according to the
type of loan described:
December 31, 1993 December 31, 1992
------------------------ ------------------------
PERCENT OF PERCENT OF
LOANS IN LOANS IN
EACH CATEGORY EACH CATEGORY
TO TOTAL TO TOTAL
ALLOWANCE LOANS ALLOWANCE LOANS
---------- ------------- ---------- -------------
Commercial, Financial,
and Agricultural $ 197,908 23.73% $ 182,595 25.78%
Real Estate-Construction 9,442 1.13 3,472 .49
Real Estate - Mortgage 520,031 62.37 426,746 60.26
Individual & Other 106,521 12.77 95,394 13.47
--------- ------ --------- ------
Totals $ 833,902 100.00% $ 708,207 100.00%
========= ====== ========= ======
DEPOSITS
The average daily balances and average rates paid on deposits for the
reported periods are listed below:
1993 1992
----------------------- -----------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE RATE PAID BALANCE RATE PAID
------------ --------- ------------ ---------
Non-Interest Bearing
Demand Deposits $ 9,264,788 - % $ 9,614,707 - %
Savings and Now Accounts 46,620,872 2.31% 38,501,740 2.85%
Insured Money Market
Accounts and
Certificates of Deposit 66,099,629 3.44% 68,802,254 4.20%
----------- -----------
$121,985,289 $116,918,701
=========== ===========
Maturities of time deposits of $100,000 or more at December 31, 1993, are
summarized below:
3 Months or Less $ 8,978,310
Over 3 Months through 6 Months 2,447,560
Over 6 Months through 1 Year 772,317
Over 1 Year 2,656,838
----------
$14,855,025
==========
12
<PAGE> 17
RETURN ON EQUITY AND ASSETS
The table below summarizes significant financial ratios for the years
ended December 31, 1993 and 1992:
1993 1992
------------ ------------
Average Total Assets $138,915,125 $132,198,881
Average Stockholders' Equity $ 14,741,625 $ 13,198,631
Net Income $ 2,429,633 $ 1,854,847
Earnings per Share-Common $ 7.45 $ 5.71
Cash Dividends Paid Per Share-Common $ 2.50 $ 2.00
Return on Average Total Assets 1.75% 1.40%
Return on Average Stockholders' Equity 16.48% 14.05%
Dividend Payout Ratio 33.56% 35.01%
Average Equity to Average Assets 10.61% 9.98%
Item 2. Properties
The Bank owns seven pieces of property, described below:
(a) The land where the main office of the Corporation and the Bank is located
at 107 East Main Street, New Roads, Louisiana. This property includes a
parking lot, containing 67 parking spaces. The office building is
approximately 11,460 square feet. The cost of the property to the Bank was
$162,500; construction cost of the building totaled $492,332. Due to the
Bank's rapid growth, additional office space adjacent to the main office was
purchased during 1984. The cost of the land and buildings was $233,273.
Improvements and renovations of the additional space in 1986 was $79,841.
(b) The parcel of land where the Morganza, Louisiana, branch of the Bank is
located, eleven miles north of the main office, was constructed in 1979 and
contains approximately 3,216 square feet. The cost of the property and the
building was $297,244.
(c) The Hospital Road Branch of the Bank is located in New Roads on Highway
3131, west of the Bank's main office. The cost of the land and the building
was $172,551.
(d) The Bank's third branch is located in Lakeland, Louisiana, approximately
twelve miles south of the Bank's main office. The branch building at this site
cost $96,989, while the one acre parcel of land on which it is situated cost
$500. In 1981 the bank remodeled the branch building increasing the available
office space and drive-in facilities. The cost of the remodeling of this
structure was $146,755.
13
<PAGE> 18
(e) The Bank's fourth branch is located in Livonia, Louisiana, approximately
twenty miles southwest of the Bank's main office. The cost of the branch
building at this site was $288,481. The original parcel of land purchased for
the Livonia Branch was purchased for $38,561, however the land was not suitable
for the building and a second parcel of land was purchased. The second parcel
of land is located approximately one half block northeast of the original site;
the land was purchased for $72,404.
(f) Due to the Bank's drive-in facility being obsolete, in 1989 a new motor
bank was constructed on existing bank property and is located at the corner of
New Roads Street and Fifth Street. The cost of the building was $150,300.00.
(g) The Bank's fifth branch is located in Baton Rouge, Louisiana,
approximately forty miles southeast of the Bank's main office. This facility
was purchased from the Resolution Trust Corporation in August, 1992. It
contains approximately 1,800 square feet. The cost of the land and the
building was $165,000, and the cost of remodeling the structure was $43,000.
Item 3. Legal Proceedings
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the Corporation or the
Bank is a party or of which any of the property of either is the subject.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders of the Corporation
during the fourth quarter of the year ending December 31, 1993.
14
<PAGE> 19
Part II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
The Corporation's stock is not listed on any securities exchange. Due to
the lack of an established public trading market, BNR Bancshares, Inc. does not
have the available information to furnish the high and low sales prices or the
range of bid and ask quotations for its stock. However, based upon limited
inquiries by management it is believed that the stock of the Corporation traded
at the following amounts:
1993 1992
------ ------
First Quarter $37.00 $20.00
Second Quarter NO SALES $29.00
Third Quarter NO SALES $33.00
Fourth Quarter $44.00 $31.50
Management is not aware of any negotiated sales of the Company stock in
the second and third quarters of 1993. There can be no assurance that these
limited inquiries adequately reflect the actual high and low bids or prices for
the stock of the Corporation.
The Corporation has 731 stockholders of record as of March 31, 1994.
Cash dividends of $2.50 and $2.00 per share were paid on the common stock for
the years 1993 and 1992, respectively.
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations
15
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of the significant
changes in income and expenses and related changes in financial position for
the years 1993, 1992, and 1991. This information should be used in conjunction
with the financial statements and the notes relating thereto.
FINANCIAL CONDITION
Total assets for the Company as of December 31, 1993 were $136.7 million
compared to $136.4 million as of December 31, 1992, a growth of $.3 million, or
.2%. Deposits declined $1.1 million, primarily because of a reduction in
public fund deposits. Loans increased $1.5 million, or 2.4%, primarily because
of loans originated in the Bank's Baton Rouge operations. We entered the Baton
Rouge market in 1991 by purchasing loans from the Resolution Trust Corporation
at a net price of $10.5 million. We were able to expand on this portfolio in
1993 because we opened a branch facility in Baton Rouge in October, 1992.
Other interest-bearing assets decreased $1.0 million as a result of loan
growth.
Other Real Estate Owned by the Company decreased 81.8% in 1993 because
of sales of properties. Net loan charge-offs were $94,305 or $15,730 less than
the 1992 level. The Company's non-accrual loans increased by $624,000 or
94.2%. The growth was primarily in loans to farmers which are partially
guaranteed by an agency of the U. S. Government. The provision for loan losses
was increased by $80,000 because of the increase in the loan portfolio.
16
<PAGE> 21
CAPITAL ADEQUACY
The following table summarizes certain of the Company's capital ratios at
December 31, 1993.
December December Minimum
31, 31, Regulatory
1993 1992 Guidelines
-------- -------- ----------
Risk-Based Capital Ratios
Tier 1 22.23% 19.09% 4.0%
Tier 2 1.21% .99% -
-------- -------- ----------
Total 23.44% 20.08% 8.0%
======== ======== ==========
Leverage Ratio 11.19% 10.34% 4.00-5.00
Total Stockholders' Equity
as of a % of Assets at End
of Period 11.37% 10.01% -
The main source of capital for the Company continues to be the retention of
earnings. The net increase in Stockholders' Equity during 1993 was $1,670,000,
or an increase of 12.2% over 1992. This increase excludes the net unrealized
gain on securities available for sale of $217,000. This net increase was the
result of net income from the operations of the Company, less the payment of
regular cash dividends of $816,000. Various regulatory authorities have
attempted to reduce the number of bank failures by adopting Risk-Based Capital
requirements for banks. These guidelines risk weight all of a bank's assets
and off-balance-sheet activities. A bank's required capital is the
risk-weighted total of its assets and off-balance-sheet activities multiplied
by a specified capital percentage. As shown in the table, the Company's
Risk-Based Capital ratios significantly exceed the minimum regulatory
guidelines. Also shown in the table is the Company's Leverage Ratio, and the
minimum standard is 4%. Depending on the judgment of various regulatory
agencies, a greater leverage ratio, up to 5%, may be required based on the
condition of the organization.
17
<PAGE> 22
RESULTS OF OPERATIONS
Net Interest Income
The primary source of earnings for the Company is net interest income,
which is the difference between interest and fees generated from
interest-earning assets and the interest costs associated with interest-bearing
liabilities. For analytical purposes, net interest income is presented on a
tax equivalent basis. Certain earning assets are exempt from income taxes,
therefore a tax equivalent adjustment is included so that interest-earning tax
exempt assets will be comparable with other earning assets. The primary
factors that affect net interest income are the changes in volume and mix of
earning assets and interest-bearing liabilities, along with changes in market
interest rates. Interest rates declined significantly in 1993 and 1992. Total
interest income for 1993 was $10.1 million as compared to $10.5 million for
1992, a $348,000 decrease. Loan balances increased from $63.2 million on
December 31, 1992 to $64.7 million on December 31, 1993. The increase in loan
balances was offset by declining interest rates to account for the change in
interest income on loans. Interest expense on deposits was $3.3 million in
1993, a decline of $638,000 from 1992. Average interest-bearing deposits
increased $5.4 million, or 5.0% in 1993, but this was offset by the decline in
interest rates to account for the change in interest expense on deposits.
Net interest income for 1993 was $6.8 million compared to $6.5 million
in 1992 and $5.2 million in 1991. Net interest margin (net interest income
divided by average interest-earning assets) was 5.30%, 5.35% and 4.46% for
1993, 1992 and 1991, respectively. Growth in the Company's average deposit
base, loan portfolio, investment and money market portfolios combined with
lower interest rates throughout the periods accounted for the fluctuations.
18
<PAGE> 23
While the growth in net interest income is encouraging, interest margins, as
indicated above, are narrowing, and as a result, net interest income could be
adversely affected in the future.
Earning Assets
Earning assets averaged $128.5 million for 1993, an increase of $6.5
million, or 5.3%, compared to the 1992 average of $122.0 million. The 1992
average represented an increase of $1.4 million, or 1.1% from the 1991 average
of $120.7 million. For 1993 net loans averaged $66.4 million, a $4.2 million
increase, or 6.8% over the balance reported in 1992. The average loan balances
in 1992 increased $6.3 million, or 11.2% compared to the average balance in
1991. The Company purchased loans from the Resolution Trust Corporation in
1991 at a net price of $10.5 million.
Investment securities averaged $58.4 million for 1993 and $56.9 million
for 1992. The investment securities average for 1993 increased $1.5 million,
or 2.64% over the 1992 average. During 1991, volatile mortgage-backed
securities and zero coupon municipal bonds were sold. Also, various other
municipal bonds were sold. These funds were invested primarily in U. S.
Treasury securities and Securities of Other U. S. Government Agencies. This
action was taken to improve the overall quality of the investment portfolio, to
increase liquidity, and to take advantage of higher yielding investments as the
Company's ability to realize the full benefit of its tax exempt income became
limited.
The Company's investment portfolio had an unrealized gain of $.8 million,
or 3.6%, as of December 31, 1993, as compared to an unrealized gain of $.9
million, or 1.48%, as of December 31, 1992. These figures represent a point in
time and can change depending on current market rates. The Company's
19
<PAGE> 24
strategy to improve the quality of the investment portfolio and declining
interest rates contributed to the decline in the unrealized gain.
Interest-Bearing Liabilities
Interest-bearing liabilities in 1993 averaged $112.8 million, an increase
of $5.5 million, or 5.1%, as compared to the 1992 average. Interest-bearing
liabilities in 1992 averaged $107.3 million, a decrease of $.5 million, or .4%,
as compared to the 1991 level.
Savings and NOW accounts averaged $46.6 million, an increase of $8.1
million, or 21.4% as compared to the 1992 average. Insured money market
accounts and certificates of deposit decreased $2.7 million, or 3.9% from the
1992 average. The majority of the growth in average deposits for the past two
years has been in New Roads-Based public funds. These deposits declined in the
second half of 1993, and the Company anticipates that the trend will continue
in 1994.
Allowance and Provision for Loan Losses
An adequate level of the allowance for loan losses (reserve) is determined
by reviewing the quality of the loan portfolio, actual loan loss experience and
the current and anticipated economic conditions and their effect on the market
served by the Company. The provision for possible loan losses is the amount
charged to earnings in order to maintain an adequate level of allowance. Other
significant factors considered in determining the levels of the provision and
the reserve are the growth or decline in the loan portfolio, the composition of
the portfolio, differing risks associated with each type of loans, the current
and prospective financial condition of borrowers, and the level of past due and
nonperforming loans. Management reviews the loan portfolio to identify
potential losses and to determine that
20
<PAGE> 25
the level of reserve adequately reflects the potential loss exposure. Loans
identified as problem credits are reviewed more frequently to determine
potential changes in the reserve. Since actual losses may vary from current
assessments, any necessary adjustments to the reserve are recorded in the
periods in which they become known.
The reserve totaled $833,902 at the end of 1993 as compared to $708,207
and $678,242 for 1992 and 1991, respectively. The balance in the reserve
account reflects management's continued evaluation of the potential risk of the
loans in the current portfolio. Loans purchased from the Resolution Trust
Company were purchased with an average discount of approximately 7%.
Management believes that adequate provisions were made in those periods based
on the review of the quality of the loans at year end. The reserve as a
percentage of loans was 1.29% at year end 1993, 1.12% at year end 1992, and
1.15% at year end 1991. Management believes that the reserve is adequate to
cover possible losses in the loan portfolio.
The Company's net charge offs were $94,305, $110,035, and $125,133 for
1993, 1992, and 1991, respectively. The provision for loan losses was
$220,000, $140,000, and $75,000, respectively. The amount of contributions to
the provision reflects management's current evaluation of the reserve adequacy
to cover potential loss exposure.
Other Income
The decrease in other income of $26,000 was a result of a decline of
$146,860 in the gains on sales of securities. Nontaxable securities whose
value was diminished because of the Company's income tax position were sold in
1992 and 1991. Service charges on deposit accounts increased $62,000 in 1993.
New fee schedules were implemented in 1993 and 1992 to partially offset the
21
<PAGE> 26
increase in federal deposit insurance. Other operating income increased
$59,000 primarily because of a new product. The Company began offering mutual
fund and annuity products to customers in February, 1993, under a rental and
commission arrangement with another company.
Other Expenses
In 1993 total other expenses decreased $260,000. Salary and employee
benefits decreased by $65,000 in 1993. The Company eliminated nineteen
fulltime positions in 1992 and 1991. Occupancy expense increased $45,000,
primarily because of the opening of a branch office in Baton Rouge in October,
1992. Net other real estate expenses decreased by $14,000 because of the
decline in these assets. Other operating expenses declined by $227,000 in
1993. The primary factor in this decrease was a $229,000 decline in the net
cost of deferred compensation plans for directors and executive officers. New
participants in 1992 resulted in approximately $65,000 of expense in 1992. The
remaining variance was the result of a change in the directors' deferred
compensation plan in June 1993 from a defined benefit plan to a defined
contribution plan.
Net Income
Income before income taxes and cumulative effect of a change in accounting
principle increased $444,000 in 1993, as compared to 1992. This increase was
due primarily to the increase in net interest income. As mentioned previously,
interest margins are narrowing and this could adversely affect net interest
income in the future. The total provision for federal income taxes charged
against income amounted to $825,000, $563,000, and $84,000 for the years ended
December 31, 1993, 1992, and 1991, respectively. The provisions represent
effective tax rates of 29% in 1993, 23% in 1992, and
22
<PAGE> 27
9% in 1991. Income before cumulative effect of a change in accounting
principle was $2,038,000 in 1993, an increase of $183,000, or 9.9% over 1992.
The Company adopted FASB Statement No. 109, "Accounting for Income Taxes" in
1993. The cumulative effect of the adjustment to adopt this statement was an
increase in Net Income of $392,000. Net income of $2,430,000 in 1993
represents a return on total assets of 1.75% compared with returns of 1.40% in
1992, and .67% in 1991. Earnings per share, $7,45, increased $1.74 or 30.5%
for 1993 over 1992. For 1992, earnings per share increased $2.98. Also,
management is not aware of any trends, events, or uncertainties which would
have a material impact on the Company or the Bank.
REGULATORY MATTERS
The Bank's records were examined by a regulatory agency in February
1993. Management is not aware of any current recommendations by these
authorities which would have a material impact on liquidity, capital,
resources, or operations of the Bank.
Asset/Liability Management
Optimizing net interest income is the goal of Asset and Liability
Management. Management must limit interest rate risk in the balance sheet to
reduce the impact of sudden changes in market interest rates. Management
utilized asset/liability modeling in order to project the effect of interest
rate changes on net interest income and liquidity under current and expected
economic conditions.
Proper asset and liability management helps to maintain an appropriate
balance between interest sensitive assets and liabilities while assuring
adequate liquidity. The asset/liability management plan attempts to minimize
interest rate risk by matching rate sensitive assets and liabilities.
23
<PAGE> 28
However, interest rate risk cannot be eliminated, since asset yields and rates
on liabilities may change by different amounts at the same time. The Company's
interest sensitivity measurements for several time intervals at December 31,
1993 are shown below. These figures represent a point in time and are not
necessarily indicative of the position on other dates.
1-90 Days 1-180 Days 1-365 Days
Cumulative Gap as a % of
Earning Assets (16.36%) (18.38%) (1.68%)
Meeting customer needs for loans and deposit withdrawals at the most
economical cost is the purpose of liquidity management. Sources of liquidity
on the asset side of the balance sheet consist of cash, near-cash items
including deposits with other banks maturing within one year, federal funds
sold, and short term securities maturing within one year. These liquid assets
totaled $34.3 million or 25.1% of total assets as of December 31, 1993 and
$29.8 million or 21.9% of total assets as of December 31, 1992.
The Company's core deposits are its most important and stable source of
funds. Average core deposits totaled $106.5 million and $100.3 million for
December 31, 1993 and 1992 respectively. Average time deposits over $100,000
were $15.5 million in 1993, a 6.6% decrease from 1992. The decrease was in
individual deposits as customers sought higher yielding investments.
A secondary source of short-term liquidity for the Company is short-term
borrowings. Federal Fund lines of credit are established with several of the
Company's correspondent banks. These lines can be used to meet short term
liquidity needs.
It is the belief of management that liquidity is adequate to meet all of
the funding needs of the Company's customers.
24
<PAGE> 29
Interest Rate Sensitivity (Dollars in Thousands)
The following table presents the interest sensitivity of the Company at
December 31, 1993. It should be noted that this table presents the Company's
overall position for a single day, which may not be indicative of its position
in the future.
1-90 91-180 181-365 Over
Floating Days Days Days 1 Year Total
-------- ---- ---- ---- ------ -----
Rate Sensitive
Assets:
Investment
Securities* $ 0 $ 8,777 $ 5,809 $ 11,619 $30,318 $ 56,523
Short term
Investments 4,750 0 0 0 0 4,750
Loans** 13,987 8,356 5,663 13,289 22,161 63,456
------ ------ -------- ------- ------ -------
Total $18,737 $17,133 $ 11,472 $ 24,908 $52,479 $124,729
====== ====== ======== ======= ====== =======
Rate Sensitive
Liabilities:
Money Market
Deposits*** $13,464 $ 0 $ 0 $ 0 $ 0 $ 13,464
Time Deposits
and Savings 0 25,138 13,991 4,079 17,006 60,214
Other Deposits-*** 17,627 0 0 0 18,926 36,553
------ ------ -------- ------- ------ -------
Total $31,091 $25,138 $ 13,991 $ 4,079 $35,932 $110,231
====== ====== ======== ======= ====== =======
Gap ($12,354)($ 8,005)($ 2,519) $ 20,829 $16,547 $ 14,498
Cumulative Gap ($12,354)($20,359)($ 22,878)($ 2,049) $14,498
Cumulative Rate
Sensitive Assets
to Rate Sensitive
Liabilities .60:1 .64:1 .67:1 .97:1 1.13:1
*Include estimated mortgage-backed securities prepayment based upon the
previous months actual principal repayments. Using prepayment assumptions, the
estimated average remaining life of the mortgage-backed securities portfolio at
December 31, 1993 was between six and seven years. Investment Securities are
reported at amortized cost.
**Non accrual loans are excluded.
***The Company's experience has indicated that the repricing of retail NOW and
savings accounts in response to changes in general market rates does not result
in rate changes of the same magnitude. In addition, these deposit categories
have historically been very stable sources of funds for the Company, which
would indicate a much longer implicit maturity than their contractual maturity.
Consequently, retail NOW and savings accounts are included in the "over 1 year"
category.
25
<PAGE> 30
Item 7. Financial Statements and Supplementary Data
The following financial statements of the Corporation in the Corporation's
1993 Annual Report, are hereby specifically incorporated by reference:
Audited Financial Statements:
Independent Auditors' Report
Consolidated Balance Sheets
December 31, 1993 and 1992
Consolidated Statements of Income
for the years ended December 31, 1993, 1992 and 1991
Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31, 1993, 1992 and 1991
Consolidated Statement of Cash Flows
for the years ended December 31, 1993, 1992 and 1991
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no disagreements on accounting and financial disclosure
between registrant and Hannis T. Bourgeois & Co., L.L.P.
26
<PAGE> 31
Part III
Item 9. Directors and Executive Officers of the Registrant
The following table indicates for each director his or her age, principal
occupation and business experience for the last five years, position and
offices held with Registrant or its subsidiaries, the year the director was
first elected a director of Registrant or Bank of New Roads, and the year the
Directors' term of office will expire. All directors listed below are members
of the Board of Directors of the Bank.
<TABLE>
<CAPTION>
Present Occupation Year Term
and Principal Position and Offices of Office
Occupation for Last Held with Registrant Director Will
Name of Director Age Five Years and Subsidiaries Since Expire
- -------------------------- --- ------------------- -------------------- -------- ---------
<S> <C> <C> <C> <C> <C>
James M. Bouanchaud (1) 62 President, New Roads Member of Special 1956 1994
Motor Co., Inc., Committee of Registrant
Supreme Ford, Inc., and Executive Committee
and Quality Buick- of Bank
Chevrolet
Madeleine B. Caillet (1) 52 Farming Interests Chairman of Bank's Audit 1981 1995
Committee
John L. Crosby (1) 63 Manager of Citgo Member of Executive 1971 1996
Division of Morel J. Committee of Bank
Lemoine Distributors,
Inc. since 1990.
Previously was owner
of this oil Distribu-
torship
Curtis P. Fremin 63 Former Vice President Member of Executive 1980 1995
of Bank. Retired in Committee of Bank
1992.
James H. Fontaine 41 Farming and Real 1989 1996
Estate Interests
Dr. Bobby G. Fulmer 59 Physician 1975 1996
Frank J. Greely, Jr. 54 President and Chief Member of Executive 1993 1994
Executive Officer of Committee of Bank
Registrant and Bank
since 1993. Was
President and Chief
Executive Officer of
two other banks during
last five years.
</TABLE>
27
<PAGE> 32
<TABLE>
<CAPTION>
Present Occupation Year Term
and Principal Position and Offices of Office
Occupation for Last Held with Registrant Director Will
Name of Director Age Five Years and Subsidiaries Since Expire
- -------------------------- --- ------------------- -------------------- -------- ---------
<S> <C> <C> <C> <C> <C>
Dr. Robert N. Helm 67 Physician 1975 1996
Van P. Major 42 Certified Public Member of Special 1983 1996
Accountant Committee of Registrant
Walter C. Parlange, Jr. 70 Farming and Member of Audit 1978 1995
Investments Committee of Bank
Roland J. Roberts 75 Retired Teacher Member of Audit 1981 1995
Committee of Bank
Percy V. Rougon 78 Retired Professor Member of Executive 1977 1995
Committee of Bank
Charles R. Smith (2) 67 Former President and Chairman of the Board 1961 1994
Chief Executive and Secretary of
Officer of Registrant Registrant and Bank.
and Bank. Retired in Chairman of Executive
1991. Committee of Bank
F. Audley Smith, Jr.(2) 46 Partner of Kearney, Member of Special 1992 1994
Smith, Chustz and Committee of Registrant
Minogue, Attorneys-
at-Law
</TABLE>
--------------------------
(1) James M. Bouanchaud, Madeleine B. Caillet and John L. Crosby are first
cousins.
(2) Charles R. Smith is the Uncle of F. Audley Smith, Jr.
None of the Directors listed above nor the Executive Officers listed below
serve as directors of other companies with a class of securities registered
under the Securities Exchange Act of 1934.
Executive officers of the Registrant or the Bank as of December 31, 1993
are as follows:
<TABLE>
<CAPTION>
Position and Offices
Held with Registrant Officer
Executive Officer Age and Subsidiary Since
- ---------------------- --- -------------------- -------
<S> <C> <C> <C>
Frank J. Greely, Jr. 54 President and Chief 1993
Executive Officer of
Registrant and Bank
Daniel J. Dietrick 48 Treasurer of Registrant 1989
and Senior Vice President
of Bank in charge of the
Bank Operations Division
</TABLE>
28
<PAGE> 33
<TABLE>
<CAPTION>
Position and Offices
Held with Registrant Officer
Executive Officer Age and Subsidiary Since
- ---------------------- --- -------------------- -------
<S> <C> <C> <C>
Richard M. Hollan 46 Senior Vice President of 1991
Bank in charge of Customer
Sales Division since 1991.
From 1990 to 1991, was
Senior Vice President of
Marketing for Millican and
Michaels Credit Services.
From 1989 to 1990, was CEO
and 50% owner of Public
Investors of LA., Inc.
Marie B. LaCoste 53 Senior Vice President of 1987
Bank in charge of Loan
Services Division
</TABLE>
----------------------------
The Board of Directors of Bancshares, which has no compensation committee,
met 4 times during 1993. The Board of Directors of the Bank has an Executive
Committee and an Audit Committee, membership of each of which is indicated in
the preceding table. During the year 1993, the Board of Directors of the Bank
held 12 regular monthly meetings. The Executive Committee, which also
functions as a loan committee, met 41 times during the year to review and
approve loans. The Audit Committee met 4 times during the year to review and
approve the semiannual directors' examinations and other audit activities. In
December 1992, Directors of Bancshares appointed three Directors to comprise
the Special Committee. The function of this committee is to review and analyze
any indications of interest, etc. to purchase the Bank. The Special Committee
met 15 times during the year. Neither Bancshares nor the Bank has a standing
nominating committee. During 1993, no director attended fewer than
seventy-five percent of the meetings of the Board of Directors of Bancshares or
of the aggregate number of meetings of the Board of Directors of the Bank and
of the committees of the Bank's Board of Directors of which he was a member.
29
<PAGE> 34
Item 10. Director and Executive Compensation
The following table shows all compensation for each of the last three
years awarded to or earned by the Chief Executive Officer of Bancshares and the
Bank. No other executive officer of Bancshares or the Bank had total annual
salary and bonus exceeding $100,000 for the year ended December 31, 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
All Other
Annual Compensation Compensation
------------------------------------------------------------------------------------------------------
Name and
Principal Position Year Salary Bonus Other Other
------------------- ---- ------ ----- ----- -----
<S> <C> <C> <C> <C> <C>
Frank J. Greely, Jr. 1993 $26,154 $ 5,000 $0 $3,054(1)
Chief Executive Officer 1992 $0 $0 $0 $0
(From 9/93) 1991 $0 $0 $0 $0
Daniel J. Dietrick
Senior Vice President 1993 $69,268 $ 20,000 $0 $5,189(2)
(Acting Chief Executive 1992 $65,009 $ 13,213 $0 $3,901
Officer from 4/93 to 9/93) 1991 $61,508 $0 $0 $3,075
Howard L. Hobson 1993 $37,400 $0 $0 $162,884(3)
Chief Executive Officer 1992 $108,334 $ 26,426 $0 $35,350
(From 8/91 to 4/93) 1991 $100,000 $0 $0 $21,180
------------------------------------------------------------------------------------------------------
</TABLE>
______________________
(1) Includes board fees of $3,000 and accruals of $54 under a director's
deferred compensation agreement.
(2) Represents the Bank's contributions on behalf of Mr. Dietrick to the
Bank's Profit Sharing Plan.
(3) Includes the Bank's contributions on behalf of Mr. Hobson to the
Bank's Profit Sharing Plan of $4,825 and board fees of $3,000. Under
a severance agreement, Mr. Hobson was paid $76,267 of severance pay,
$20,729 under a supplemental retirement agreement, and $58,063 under a
director's deferred compensation agreement.
Mr. Frank J. Greely, Jr. entered into a "Change of Control"
compensation agreement with the Bank on his employment in September, 1993. In
the event Mr. Greely's employment is terminated following a change of control,
he is entitled to receive $170,000, reduced by the sum of $7,083.33 a month for
each month Mr. Greely was paid by the Bank.
Directors of Bancshares receive no remuneration for serving in that
capacity. Each director of the Bank receives $750 for each meeting held by the
Bank's Board of Directors and $100 for each Audit Committee and Executive
Committee meeting actually attended and $200 for each Special Committee meeting
actually attended. Employees who are committee members (Mr. Frank J. Greely,
Jr.) receive no compensation for committee meeting attendance.
30
<PAGE> 35
Each director who chooses to do so may enter into a Deferred
Compensation Agreement with the Bank pursuant to which the director defers
receipt of up to $750 of his or her monthly fees. All directors have elected
to enter into such an agreement. The agreement is designed to pay each
director fifteen annual payments beginning in the year the director reaches age
70. The amount of the annual payment is determined, generally, by the years of
participation in the agreement and by the amount of the fees which the director
has elected to defer. Upon the director's death after retirement, any unpaid
annual payments are payable to the director's beneficiary. If the director
retires or dies before his or her plan retirement date, the director or the
director's beneficiaries are entitled to annual payments of a reduced amount.
If the director's service is terminated or if he or she discontinues
participation in the agreement for any reason other than death the director may
receive fifteen annual payments of a reduced retirement benefit beginning at
plan retirement date or he or she may elect to receive the present value of
such payments in a lump sum. The amount of these early termination benefits is
increased by 50% if the director's services are terminated within two years
following a change of control of the Bank. If the Plan is terminated because
of a change of control of the Bank, the Directors' benefits are increased by
30% of each Director's account balance. To informally fund its obligations
under the agreements, the Bank uses the deferred fees plus additional amounts
contributed by the Bank to purchase insurance policies having cash values and
benefit amounts which are approximately equal to the amounts payable to the
directors and their beneficiaries.
Item 11. Security Ownership of Certain Beneficial Owners and Management
To the best of the Company's knowledge, no person or group (as those
terms are used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) beneficially owned, as of March 21, 1994, more than 5% of the shares
outstanding of the Company's Common Stock, except as set forth in the following
table. Unless otherwise stated, each person has sole voting and investment
power with respect to the shares indicated as beneficially owned by that
person.
Title Name and Address Number of Shares Percent
of Class of Beneficial Owner Owned of Class
- -------- ------------------- ---------------- --------
[S] [C] [C] [C]
Common Madeleine B. Caillet 18,336 5.62%
P. O. Box 67
Oscar, Louisiana 70762
31
<PAGE> 36
The following table presents information concerning the beneficial
ownership of Registrant's common stock by its Directors and Executive Officers
as of March 31, 1994:
BNR Bancshares Stock Beneficially Owned
---------------------------------------
Name and Address Title of Class # of Shares % of Class
- ------------------------------------------------------------------------------
James M. Bouanchaud* Common 8,508 2.61
New Roads, Louisiana
Madeleine B. Caillet Common 18,336 5.62
Oscar, Louisiana
John L. Crosby Common 3,765 1.15
New Roads, Louisiana
Daniel J. Dietrick* Common 120 .03
New Roads, Louisiana
Curtis P. Fremin* Common 1,049 .32
Morganza, Louisiana
James H. Fontaine Common 700 .21
New Roads, Louisiana
Dr. Bobby G. Fulmer Common 3,609 1.11
New Roads, Louisiana
Frank J. Greely, Jr. Common 0 .00
Baton Rouge, Louisiana
Dr. Robert N. Helm* Common 1,496 .46
New Roads, Louisiana
Richard M. Hollan* Common 27 .01
New Roads, Louisiana
Marie B. LaCoste* Common 196 .06
Morganza, Louisiana
Van P. Major* Common 1,562 .48
New Roads, Louisiana
Walter C. Parlange, Jr. Common 1,600 .49
New Roads, Louisiana
Roland J. Roberts Common 300 .09
New Roads, Louisiana
Percy V. Rougon* Common 2,012 .62
Rougon, Louisiana
Charles Ray Smith* Common 4,096 1.26
New Roads, Louisiana
F. Audley Smith, Jr.* Common 3,740 1.15
New Roads, Louisiana
All Directors and Common 51,116 15.67
Officers as a group
32
<PAGE> 37
*Shares beneficially owned by Mr. Bouanchaud include 4,388 shares owned by a
trust of which he is a trustee. Shares beneficially owned by Mr. Fremin
include 20 shares owned by his wife. Shares beneficially owned by Dr. Helm
include 450 shares owned by a professional medical corporation of which he is a
director and 200 shares owned by his wife. Shares beneficially owned by Mr.
Rougon include 106 shares owned by his wife. Shares beneficially owned by Mr.
Charles Ray Smith include 76 shares owned by his wife. Shares beneficially
owned by Mr. Major include 100 shares owned by his minor children and 110
shares owned by his business partnership. Shares beneficially owned by Mr. F.
Audley Smith, Jr. include 555 shares owned by his wife. Shares beneficially
owned by Mr. Dietrick, Mr. Hollan and Mrs. LaCoste include 120 shares, 27
shares and 96 shares respectively held in their accounts in the Employee Stock
Ownership Plan.
Item 12. Certain Relationships and Related Transactions
The Bank has had, and expects to have in the future, banking
transactions in the ordinary course of business with the Bank's and Bancshares'
directors, officers, principal stockholders and their associates, on the same
terms, including interest rates and collateral on loans, as those prevailing at
the same time for comparable transactions with others. In the opinion of
management, these loans did not involve more than the normal risk of
collectibility or present any unfavorable features.
33
<PAGE> 38
Part IV
Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Financial Statements
1. The financial statements of BNR Bancshares, Inc. in the
Corporation's 1993 Annual Report are incorporated by reference
in Item 7.
2. Other financial statement schedules are either omitted because
they are inapplicable or included in the financial statements
or related notes.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter 1993.
(c) Exhibits
3. Articles of Incorporation and by-laws of BNR Bancshares, Inc.
are incorporated by reference to the Corporation's Registration
Statement on Form S-14 filed March 18, 1982, with the
Securities and Exchange Commission.
10(a) Change of Control Contract for Frank J. Greely, Jr., President
and Chief Executive Officer.*
10(b) Director's Deferred Compensation Agreement (similar agreements
are omitted pursuant to Rule 12b-31 of the Exchange Act).*
13. 1993 Annual Report of BNR Bancshares, Inc.
22. Subsidiary of the Registrant.
*Compensatory Plan or Agreement
34
<PAGE> 39
Signatures
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
BNR Bancshares, Inc.
By: /s/ Frank J. Greely, Jr.
----------------------------
Frank J. Greely, Jr.
President, Chief Executive
Officer
Dated: March 16, 1994
35
<PAGE> 40
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities indicated on March 16, 1994.
/s/ Charles Ray Smith Chairman of the Board and Director
- --------------------------------
Charles Ray Smith
/s/ Frank J. Greely, Jr. President and Director
- -------------------------------- (Principal Executive Officer)
Frank J. Greely, Jr.
/s/ Daniel J. Dietrick Treasurer (Principal Financial and
- -------------------------------- Accounting Officer)
Daniel J. Dietrick
/s/ James M. Bouanchaud Director
- --------------------------------
James M. Bouanchaud
/s/ Madeleine B. Caillet Director
- --------------------------------
Madeleine B. Caillet
/s/ John L. Crosby Director
- --------------------------------
John L. Crosby
/s/ James H. Fontaine Director
- --------------------------------
James H. Fontaine
/s/ Curtis P. Fremin Director
- --------------------------------
Curtis P. Fremin
/s/ Bobby G. Fulmer, M.D. Director
- --------------------------------
Bobby G. Fulmer, M.D.
/s/ Robert N. Helm, M.D. Director
- --------------------------------
Robert N. Helm, M.D.
/s/ Van P. Major Director
- --------------------------------
Van P. Major
/s/ Walter C. Parlange, Jr. Director
- --------------------------------
Walter C. Parlange, Jr.
/s/ Roland J. Roberts Director
- --------------------------------
Roland J. Roberts
/s/ Percy V. Rougon Director
- --------------------------------
Percy V. Rougon
/s/ F. Audley Smith, Jr. Director
- --------------------------------
F. Audley Smith, Jr.
36
<PAGE> 41
SCHEDULE TO EXHIBIT 10(b)
Pursuant to Rule 12b-31 under the Securities Exchange Act of 1934, as amended,
deferred compensation agreements between the registrant and the following
directors are omitted because they are substantially identical to the deferred
compensation agreement attached as Exhibit 10(b):
James M. Bouanchaud
Madeleine B. Caillet
John L. Crosby
James H. Fontaine
Curtis P. Fremin
Bobby G. Fulmer, M.D.
Frank J. Greely, Jr.
Robert N. Helm, M.D.
Van P. Major
Walter C. Parlange, Jr.
Roland Roberts
Percy V. Rougon
Charles Ray Smith
F. Audley Smith, Jr.
(Director Emeritus)
Joseph G. Beaud
Merl Burgin
F. A. Smith
37
<PAGE> 42
EXHIBIT 22
The wholly-owned subsidiary of BNR Bancshares, Inc. is as follows:
(1) Bank of New Roads, a Bank organized under the Laws of Louisiana.
38
<PAGE> 43
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
10-KSB/A Amendment No. 1
Annual Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934 for the
Fiscal Year Ended December 31, 1993
BNR Bancshares, Inc. 0-11782
(Exact name of registrant as specified in its charter) (Comm. File No.)
Louisiana 72-0954582
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
107 East Main Street
P. O. Box 250
New Roads, Louisiana 70760
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (504) 638-3791
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $10.00 Par Value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive Proxy or
information statements incorporated by reference in Part III of this Form
10-KSB, or any amendment to this Form 10-KSB. X
---
State issuer's revenues for its most recent fiscal year. $10,131,339
State the aggregate market value of the voting stock held by
non-affiliates* of the registrant as of June 30, 1994: $21,488,217 (275,102
Shares @ $78.11 per Share)
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock $10 Par Value, 326,218 shares outstanding as of March 31, 1994.
<PAGE> 44
Documents Incorporated by Reference
Document Part of Form 10-K
-------- -----------------
Annual Report for Fiscal Year Ended Part I and Part II
December 31, 1993
*For purposes of the computation, shares owned by executive officers,
directors and 5% shareholders have been excluded.
<PAGE> 45
Item 12. Certain Relationships and Related Transactions
The Bank has had, and expects to have in the future, banking
transactions in the ordinary course of business with the Bank's and Bancshares'
directors, officers, principal shareholders and their associates, on the same
terms, including interest rates and collateral on loans, as those prevailing at
the same time for comparable transactions with others. In the opinion of
management, these loans did not involve more than the normal risk of
collectibility or present any unfavorable features.
The Bank is a party to a Supplemental Retirement Agreement with Mr.
Charles Ray Smith, dated June 1, 1989, under which Mr. Smith or his
beneficiary is entitled to receive a supplemental retirement benefit. The
benefit is payable in 60 monthly payments, beginning on August 1, 1991, and
ending on July 1, 1996. The monthly amount of the benefit is equal to
$8,382.00 minus both (i) the monthly amount Mr. Smith actually receives as a
primary social security retirement benefit and (ii) the monthly amount payable
to Mr. Smith under the Bank's defined benefit pension trust. For purposes of
this agreement, the amount payable to Mr. Smith under that defined benefit
pension trust was established as $4,760. The Bank also is a party to a fringe
benefit compensation agreement with Mr. Smith, dated October 17, 1990, under
which Mr. Smith is entitled to receive certain additional benefits, including
group medical and dental insurance, life insurance in the amount of $395,000,
use of a Company car, payment of certain ;club dues, and certain similar fringe
benefits. The annual cost to the Bank of these additional benefits is
approximately $13,800. The Bank also is a party to a Supplemental Retirement
Agreement with Mr. Curtis P. Fremin, dated January 31, 1992, under which Mr.
Fremin was entitled to receive 11 monthly payments of $5,009 from February 25,
1992, to December 25, 1992. Mr. Fremin or his beneficiary also is entitled
under this agreement to receive monthly payments of $750 beginning on January
1, 1993, and ending on December 31, 2000. Further, the Fremin Agreement
provides that the Bank will maintain certain health insurance for Mr. Fremin
and procure a term life insurance policy in the amount of $100,000 for the
period from May 1992 to May 1996.
1
<PAGE> 46
Part IV
Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Financial Statements
1. The financial statements of BNR Bancshares, Inc. in the
Corporation's 1993 Annual Report are incorporated by reference
in Item 7.
2. Other financial statement schedules are either omitted because
they are inapplicable or included in the financial statements
or related notes.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter 1993.
(c) Exhibits
3. Articles of Incorporation and by-laws of BNR Bancshares, Inc.
are incorporated by reference to the Corporation's
Registration Statement on Form S-14 filed March 18, 1982, with
the Securities and Exchange Commission.
10(a) Change of Control Contract for Frank J. Greely, Jr.,
President and Chief Executive Officer. (Attached as an
exhibit to the Form 10-KSB as originally filed.)*
10(b) Director's Deferred Compensation Agreement (similar agreements
are omitted pursuant to Rule 12b-31 of the Exchange Act).
(Attached as an exhibit to the Form 10-KSB as originally
filed.)*
10(c) Supplemental Retirement Agreement with Charles Ray Smith,
Chairman of the Board.*
10(d) Fringe Benefit Compensation Agreement with Charles Ray Smith.*
10(e) Supplemental Retirement Agreement with Curtis P. Fremin.*
13. 1993 Annual Report of BNR Bancshares, Inc.
22. Subsidiary of the Registrant.
*Compensatory Plan or Agreement
2
<PAGE> 47
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment to its Annual Report on Form 10-KSB
to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: July 25, 1994 BNR Bancshares, Inc.
/s/ Daniel J. Dietrick
------------------------
By: Daniel J. Dietrick
Its: Treasurer, Principal
Financial and Accounting
Officer
3
<PAGE> 48
AUDITED FINANCIAL STATEMENTS OF BNR BANCSHARES, INC
INCORPORATED BY REFERENCE IN
FORM 10-KSB FROM ANNUAL
REPORT TO STOCKHOLDERS
<PAGE> 49
CONTENTS
<TABLE>
<S> <C>
Audited Financial Statements:
Independent Auditor's Report. . . . . . . . . . . . . . . . . . Page 1 - 2
Consolidated Balance Sheets
December 31, 1993 and 1992 . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income
for the years ended December 31, 1993, 1992 and 1991. . . . 4 - 5
Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31, 1993, 1992 and 1991. . . . 6
Consolidated Statements of Cash Flows
for the years ended December 31, 1993, 1992 and 1991. . . . 7 - 9
Notes to Consolidated Financial Statements
December 31, 1993, 1992 and 1991. . . . . . . . . . . . . . 10 - 30
Selected Financial and Statistical Data:
Independent Auditor's Report on the
Selected Financial and Statistical Data . . . . . . . . . . 31 - 32
Condensed Consolidated Balance Sheets
December 31, 1993, 1992, 1991, 1990 and 1989. . . . . . . . 33
Condensed Consolidated Statements of Income
for the years ended December 31, 1993, 1992, 1991,
1990 and 1989 . . . . . . . . . . . . . . . . . . . . . . . 34
Condensed Consolidated Statements of Income
for the quarter periods in the years ended
December 31, 1993 and 1992 . . . . . . . . . . . . . . . . 35
</TABLE>
<PAGE> 50
January 15, 1994
Independent Auditor's Report
To the Shareholders and
Board of Directors
BNR Bancshares, Inc. and Subsidiary
New Roads, Louisiana
We have audited the Consolidated Balance Sheets of BNR Bancshares,
Inc. and Subsidiary as of December 31, 1993 and 1992, and the related
Consolidated Statements of Income, Changes in Stockholders' Equity, and Cash
Flows for each of the three years in the period ended December 31, 1993. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
1
<PAGE> 51
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of BNR Bancshares,
Inc. and Subsidiary as of December 31, 1993 and 1992, and the results of their
operations, changes in their stockholders' equity, and their cash flows for
each of the three years in the period ended December 31, 1993, in conformity
with generally accepted accounting principles.
As described in Note K to the financial statements, the Company
changed its method of accounting for incomes taxes in 1993.
Respectfully submitted,
2
<PAGE> 52
BNR Bancshares, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS
December 31, 1993 and 1992
<TABLE>
<CAPTION>
ASSETS
1993 1992
------------ ------------
<S> <C> <C>
Cash and Due from Banks - Note B $ 3,376,570 $ 3,698,079
Federal Funds Sold 4,750,000 2,400,000
Securities - Note C:
Held to Maturity (Fair Value
$22,759,712 and $61,061,458) $ 21,980,022 $ 60,169,373
Available for Sale (Fair Value
$34,872,559) 34,872,559 -
----------- -----------
$ 56,852,581 $ 60,169,373
Loans - Note D $ 64,742,419 $ 63,248,206
Less: Allowance for Loan Losses -
Note E (833,902) (708,207)
----------- -----------
$ 63,908,517 $ 62,539,999
Bank Premises and Equipment - Note F 2,489,480 2,598,589
Other Real Estate 133,220 733,793
Accrued Interest Receivable 1,133,619 1,304,362
Other Assets 4,074,301 2,991,833
----------- -----------
Total Assets $136,718,288 $136,436,028
=========== ===========
LIABILITIES
Deposits - Note G:
Noninterest Bearing $ 9,111,439 $ 9,776,774
Interest Bearing 110,230,618 110,620,343
----------- -----------
$119,342,057 $120,397,117
Accrued Interest Payable 310,009 339,763
Other Liabilities 1,527,930 2,047,938
----------- -----------
Total Liabilities $121,179,996 $122,784,818
STOCKHOLDERS' EQUITY
Common Stock - $10 Par Value;
5,000,000 Shares Authorized
and 337,500 Shares Issued - Note H $ 3,375,000 $ 3,375,000
Surplus 3,812,500 3,812,500
Unrealized Gain on Securities
Available for Sale, Net -
Note C 217,494 -
Retained Earnings 8,572,053 6,957,965
Treasury Stock - 11,282 and 12,782
Shares, Respectively, at Cost (438,755) (494,255)
----------- -----------
Total Stockholders' Equity $ 15,538,292 $ 13,651,210
----------- -----------
Total Liabilities and
Stockholders' Equity $136,718,288 $136,436,028
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 53
BNR Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
for the years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Interest Income:
Interest and Fees on Loans $ 6,384,016 $ 6,420,514 $ 6,181,708
Interest and Dividends on
Securities:
Taxable Interest $ 3,595,376 $ 3,884,864 $ 4,355,934
Nontaxable Interest 49,339 46,693 184,130
Dividends - 28,718 81,631
---------- ---------- ----------
$ 3,644,715 $ 3,960,275 $ 4,621,695
Other Interest Income 102,608 98,276 441,586
---------- ---------- ----------
Total Interest Income $10,131,339 $10,479,065 $11,244,989
Interest Expense on Deposits -
Note G 3,349,706 3,987,307 5,995,179
---------- ---------- ----------
Net Interest Income $ 6,781,633 $ 6,491,758 $ 5,249,810
Provision for Loan Losses - Note E 220,000 140,000 75,000
---------- ---------- ----------
Net Interest Income after
Provision for Loan Losses $ 6,561,633 $ 6,351,758 $ 5,174,810
Other Income:
Service Charges on Deposit
Accounts $ 739,155 $ 677,538 $ 593,805
Gain (Loss) on Securities 46,665 193,525 (590,558)
Other Operating Income - Note I 221,439 162,303 615,573
---------- ---------- ----------
Total Other Income $ 1,007,259 $ 1,033,366 $ 618,820
---------- ---------- ----------
Income before Other Expenses $ 7,568,892 $ 7,385,124 $ 5,793,630
Other Expenses:
Salaries and Employee Benefits -
Note I $ 2,194,928 $ 2,259,565 $ 2,261,772
Occupancy Expense 438,377 393,158 342,799
Net Other Real Estate Expense (3,236) 10,395 87,880
Other Operating Expenses - Note J 2,076,574 2,303,914 2,131,578
---------- ---------- ----------
Total Other Expenses $ 4,706,643 $ 4,967,032 $ 4,824,029
---------- ---------- ----------
</TABLE>
(CONTINUED)
4
<PAGE> 54
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Income before Income Taxes and
Cumulative Effect of a Change
in Accounting Principle $ 2,862,249 $ 2,418,092 $ 969,601
Applicable Income Taxes - Note K 824,616 563,245 83,872
---------- ---------- ----------
Income before Cumulative Effect
of a Change in Accounting
Principle $ 2,037,633 $ 1,854,847 $ 885,729
Cumulative Effect of the Change
in the Method of Accounting
for Income Taxes - Note K 392,000 - -
---------- ---------- ----------
Net Income $ 2,429,633 $ 1,854,847 $ 885,729
========== ========== ==========
Per Share - Note H:
Income before Cumulative Effect
of a Change in Accounting
Principle $ 6.25 $ 5.71 $ 2.73
========== ========== ==========
Net Income $ 7.45 $ 5.71 $ 2.73
========== ========== ==========
Cash Dividends $ 2.50 $ 2.00 $ 1.50
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 55
BNR Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
for the years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Common Stock:
Balance - Beginning and End of
Year $3,375,000 $3,375,000 $3,375,000
========= ========= =========
Surplus:
Balance - Beginning and End of
Year $3,812,500 $3,812,500 $3,812,500
========= ========= =========
Net Unrealized Loss on Noncurrent
Marketable Equity Securities:
Balance - Beginning of Year $ - $ (252,500) $ (477,500)
Charge for Market Gains
(Losses) - 252,500 225,000
--------- --------- ---------
Balance - End of Year $ - $ - $ (252,500)
========= ========= =========
Net Unrealized Gain on Securities
Available for Sale:
Balance - Beginning of Year $ - $ - $ -
Net Change in Unrealized
Gain on Securities Avail-
able for Sale 217,494 - -
--------- --------- ---------
Balance - End of Year $ 217,494 $ - $ -
========= ========= =========
Retained Earnings:
Balance - Beginning of Year $6,957,965 $5,752,554 $5,353,902
Net Income 2,429,633 1,854,847 885,729
Cash Dividends (815,545) (649,436) (487,077)
--------- --------- ---------
Balance - End of Year $8,572,053 $6,957,965 $5,752,554
========= ========= =========
Treasury Stock:
Balance - Beginning of Year $ (494,255) $ (494,255) $ (494,255)
Issuance of 1500 Shares at Cost 55,500 - -
--------- --------- ---------
Balance - End of Year $ (438,755) $ (494,255) $ (494,255)
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 56
BNR Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Cash Flows From Operating
Activities:
Net Income $ 2,429,633 $ 1,854,847 $ 885,729
Adjustments to Reconcile
Net Income to Net Cash
Provided by Operating
Activities:
Cumulative Effect of a
Change in Accounting
Principle (392,000) - -
Provision (Credit) for
Deferred Tax (74,000) - -
Provision for
Depreciation and
Amortization 309,777 292,243 288,972
Provision for Loan
Losses 220,000 140,000 75,000
Provision for Losses
on Other Real Estate 14,500 4,500 23,500
Amortization
(Accretion) of
Securities Premium
(Discounts) 159,229 279,150 (92,909)
(Gain) Loss on Sale of
Securities (46,665) (193,525) 590,558
(Gain) Loss on Sale of
Bank Premises and
Equipment (8,513) (358) 64,087
(Gain) Loss on Sale of
Other Real Estate (1,256) 13,339 55,652
Other - 1,340 9,889
(Increase) Decrease in
Interest Receivable 170,743 175,226 (232,824)
(Increase) Decrease in
Other Assets (728,511) (596,708) (154,536)
Increase (Decrease) in
Interest Payable (29,754) (189,364) (76,608)
Increase (Decrease) in
Other Liabilities (520,008) 1,093,079 213,777
----------- ----------- -----------
Net Cash Provided
by Operating
Activities $ 1,503,175 $ 2,873,769 $ 1,650,287
</TABLE>
(CONTINUED)
7
<PAGE> 57
<TABLE>
<CAPTION>
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Cash Flows From Investing
Activities:
Net (Increase) Decrease
in Federal Funds Sold $ (2,350,000) $ 2,875,000 $ 3,250,000
Net (Increase) Decrease
in Interest Bearing
Deposits in Other
Banks - - 789,000
Purchase of Securities (18,839,723) (29,140,068) (34,981,514)
Proceeds from Sales of
Securities 9,293,488 20,461,969 25,223,550
Proceeds from Maturities
of Securities 13,080,000 7,106,006 9,365,166
Net (Increase) Decrease
in Loans (1,487,757) (4,762,847) (6,191,256)
Purchase of Bank Premises
and Equipment (203,868) (483,480) (611,281)
Proceeds from Sale of Bank
Premises and Equipment 11,713 500 28,508
Proceeds from Sale of Other
Real Estate 486,568 342,600 765,845
----------- ----------- -----------
Net Cash Used in
Investing
Activities $ (9,579) $ (3,600,320) $ (2,361,982)
Cash Flows From Financing
Activities:
Net Increase (Decrease) in
Demand Deposits, NOW
Accounts and Savings
Accounts $ (108,021) $ 4,211,800 $ 2,057,411
Net Increase (Decrease)
in Certificates of
Deposit (947,039) (3,460,615) (681,410)
Cash Dividends (815,545) (649,436) (487,077)
Issuance of Treasury Stock 55,500 - -
----------- ----------- -----------
Net Cash Provided by
(Used in) Financing
Activities $ (1,815,105) $ 101,749 $ 888,924
----------- ----------- -----------
Increase (Decrease) in Cash
and Due from Banks $ (321,509) $ (624,802) $ 177,229
Cash and Due from Banks -
Beginning of Year 3,698,079 4,322,881 4,145,652
----------- ----------- -----------
Cash and Due from Banks -
End of Year $ 3,376,570 $ 3,698,079 $ 4,322,881
=========== =========== ===========
</TABLE>
(CONTINUED)
8
<PAGE> 58
<TABLE>
<CAPTION>
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Supplemental Disclosures of
Cash Flow Information:
Cash Payments for:
Interest Paid to
Depositors $ 3,379,460 $ 4,176,756 $ 6,071,787
=========== =========== ===========
Income Tax Payments
(Refunds) $ 1,395,732 $ (36,633) $ 306,392
=========== =========== ===========
Supplemental Disclosures of
Cash Flow Information:
Non Cash Investing
Activities:
Increase (Decrease)
in Other Real Estate
Acquired in Settle-
ment of Loans $ (100,761) $ 191,533 $ 151,924
=========== =========== ===========
(Increase) Decrease in
Unrealized Loss on
Noncurrent Marketable
Equity Securities $ - $ 252,500 $ 225,000
=========== =========== ===========
Unrealized Gain on
Securities Available
for Sale $ 329,537 $ - $ -
=========== =========== ===========
Deferred Tax Effect on
Unrealized Gain on
Securities Available
for Sale $ 112,043 $ - $ -
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 59
BNR Bancshares, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993, 1992 and 1991
Note A - Summary of Significant Accounting Policies -
The accounting principles followed by BNR Bancshares, Inc. and its
wholly-owned subsidiary, Bank of New Roads, are those which are generally
practiced within the banking industry. The methods of applying those
principles conform with generally accepted accounting principles and have
been applied on a consistent basis. The principles which significantly
affect the determination of financial position, results of operations,
changes in stockholders' equity and cash flows are summarized below.
Principles of Consolidation
The consolidated financial statements include the accounts of BNR
Bancshares, Inc. (the Company), and its wholly-owned subsidiary, Bank of New
Roads (the Bank). All material intercompany accounts and transactions have
been eliminated. Certain reclassifications to previously published
financial statements have been made to comply with current reporting
requirements.
Securities
Securities classified as held to maturity are those debt securities the
Bank has both the intent and ability to hold to maturity regardless of
changes in market conditions, liquidity needs or changes in general economic
conditions. These securities are carried at cost adjusted for amortization
of premium and accretion of discount, computed by various methods
approximating the interest method over their contractual lives.
Securities classified as available for sale are those debt securities
that the Bank intends to hold for an indefinite period of time but not
necessarily to maturity. Any decision to sell a security classified as
available for sale would be based on various factors, including significant
movements in interest rates, changes in the maturity mix of the Bank's
assets and liabilities, liquidity needs, regulatory capital considerations,
and other similar factors. Securities available for sale are carried at
fair value. Unrealized gains or losses are reported as increases or
decreases in stockholder's equity, net of the related deferred tax effect.
Realized gains or losses, determined on the basis of the cost of specific
securities sold, are included in earnings. The Bank does not engage in
trading activities. Reference should be made to Note C regarding a change
to this method of accounting for securities.
10
<PAGE> 60
Loans
Loans are stated at principal amounts outstanding, less unearned income
and allowance for loan losses. Interest on commercial loans is accrued
daily, based on the principal outstanding. Interest on installment loans is
recognized and included in interest income using the sum-of-the-digits
method, which does not differ materially from the interest method.
The Bank discontinues the accrual of interest income when a loan becomes
90 days past due as to principal or interest. When a loan is placed on
non-accrual status, previously recognized but uncollected interest is
reversed to income or charged to the allowance for loan losses. If the
underlying collateral value is sufficient to cover the principal balance and
accrued interest, the Bank may decide to continue the accrual of interest.
Allowance for Loan Losses
The allowance for loan losses is an amount which in management's
judgment is adequate to absorb potential losses in the loan portfolio. The
allowance for loan losses is based upon management's review and evaluation
of the loan portfolio. Factors considered in the establishment of the
allowance for loan losses include management's evaluation of specific loans;
the level and composition of classified loans; historical loss experience;
results of examinations by regulatory agencies; an internal asset review
process; expectations of future economic conditions and their impact on
particular borrowers; and other judgmental factors.
The allowance for loan losses is based on estimates of potential future
losses, and ultimate losses may vary from the current estimates. These
estimates are reviewed periodically and as adjustments become necessary, the
effect of the change in estimate is charged to operating expenses in the
period incurred. All losses are charged to the allowance for loan losses
when the loss actually occurs or when management believes that the
collectibility of the principal is unlikely. Recoveries are credited to the
allowance at the time of recovery.
Bank Premises and Equipment
Bank premises and equipment are stated at cost less accumulated
depreciation. Depreciation is provided at rates based upon estimated useful
service lives using the straight-line method for financial reporting
purposes and accelerated methods for income tax purposes.
The costs of assets retired or otherwise disposed of and the related
accumulated depreciation are eliminated from the accounts in the year of
disposal and the resulting gains or losses are included in current
operations.
11
<PAGE> 61
Expenditures for maintenance and repairs are charged to operations as
incurred. Costs of major additions and improvements are capitalized.
Other Real Estate
Other Real Estate is comprised of properties acquired through
foreclosure. The carrying value of these properties is the lower of cost or
fair market value. Loan losses arising from the acquisition of these
properties are charged against the allowance for loan losses. Any
subsequent market reductions required are charged to other real estate
expense. Revenues and expenses associated with maintaining or disposing of
foreclosed properties are recorded during the period in which they are
incurred.
Income Taxes
The provision for income taxes is based on income as reported in the
financial statements after interest income from state and municipal
securities is excluded. Also certain items of income and expenses are
recognized in different time periods for financial statement purposes than
for income tax purposes. Thus provisions for deferred taxes are recorded in
recognition of such timing differences.
Deferred taxes are provided on a liability method whereby deferred tax
assets are recognized for deductible temporary differences and operating
loss and tax credit carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their
tax bases. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will not be realized. Deferred tax assets
and liabilities are adjusted for the effects of changes in tax laws and
rates on the date of enactment. Reference should also be made to Note K
regarding a change in the method of accounting for income taxes.
The corporation and its subsidiary file a consolidated federal income
tax return. In addition, state income tax returns are filed individually by
company in accordance with state statutes.
Earnings per Common Share
The computation of earnings per share and other per share amounts of
common stock is based on the weighted average number of shares of common
stock outstanding during each year, which is 326,093 in 1993, $324,518 in
1992, and 324,518 in 1991.
12
<PAGE> 62
Statements of Cash Flows
For purposes of reporting cash flows, cash and due from banks includes
cash on hand and amounts due from banks (including cash items in process of
clearing).
Current Accounting Developments
In December, 1991, the Financial Accounting Standards Board issued
Statement No. 107, "Disclosures about Fair Value of Financial Instruments."
This statement requires disclosure of the fair value of financial
instruments, both assets and liabilities, whether or not such instruments
are recognized in the Balance Sheet. As it relates to the Company,
financial instruments include primarily cash equivalents, securities, loans,
and deposits. SFAS No. 107 must be adopted by the Company no later than
July 1, 1995.
The Financial Accounting Standards Board has issued Statement No. 114,
"Accounting by Creditors for Impairment of a Loan", which becomes effective
for years beginning after December 15, 1994. Earlier application is
permitted. The Statement generally requires impaired loans to be measured
on the present value of expected future cash flows discounted at the loan's
effective interest rate, or as an expedient, at the loan's observable market
price or the fair value of the collateral if the loan is collateral
dependent. A loan is impaired when it is probable the creditor will be
unable to collect all contractual principal and interest payments due in
accordance with the terms of the loan agreement. The Bank has not addressed
the potential future impact of the application of this Statement, nor has it
decided whether to adopt the Statement early.
Note B - Cash and Due from Banks -
The Bank is required to maintain average cash reserve balances. The
amount of those reserves at December 31, 1993 and 1992 were approximately
$1,185,000 and $1,120,000.
Note C - Securities -
The Financial Accounting Standards Board has issued Statement No. 115,
"Accounting for Investments in Debt and Equity Securities." The statement
establishes accounting and reporting standards for investments in debt and
equity securities that have readily determinable fair value. This statement
is required to be adopted for years beginning after December 15, 1993. The
Company has elected early adoption of this statement effective December 31,
1993. The net effect is reflected in the consolidated financial statements
as a separate component of stockholders' equity as Unrealized Gain on
Securities Available for Sale, Net in amount of $217,494.
13
<PAGE> 63
Amortized cost and fair values of securities being held to maturity as
of December 31, 1993 and 1992 are summarized as follows:
<TABLE>
<CAPTION>
1993
-----------------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Securities of
Other U.S.
Government
Agencies $10,547,892 $ 507,996 $ (105) $11,055,783
Mortgage-Backed
Securities 6,995,910 201,686 - 7,197,596
Obligations of
State and
Political
Subdivisions 1,368,877 73,950 - 1,442,827
Other Securities 3,067,343 11,735 (15,572) 3,063,506
---------- ---------- ----------- ----------
Total $21,980,022 $ 795,367 $ (15,677) $22,759,712
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
1992
-----------------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury
Securities $14,200,024 $ 184,555 $ (2,079) $14,382,500
Securities of
Other U.S.
Government
Agencies 21,083,607 452,286 (70,451) 21,465,442
Mortgage-Backed
Securities 14,928,306 324,819 (32,960) 15,220,165
Obligations of
State and
Political
Subdivisions 216,884 302 (1,026) 216,160
Other Securities 9,740,552 81,906 (45,267) 9,777,191
---------- ---------- ---------- ----------
Total $60,169,373 $ 1,043,868 $ (151,783) $61,061,458
========== ========== ========== ==========
</TABLE>
The amortized cost and fair value of securities being held to maturity
as of December 31, 1993 by contractual maturity are shown below. Maturities
may differ from contractual maturities in mortgage-backed securities because
the mortgages underlying the securities may be called or repaid without any
penalties.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- -----------
<S> <C> <C>
One to Five Years $11,177,267 $11,675,574
Five to Ten Years 8,033,029 8,281,003
After Ten Years 2,769,726 2,803,135
---------- ----------
$21,980,022 $22,759,712
========== ==========
</TABLE>
14
<PAGE> 64
Securities being held to maturity with a carrying amount of $9,819,954
and $28,951,315 at December 31, 1993 and 1992, respectively, were pledged as
collateral on public deposits and for other purposes as required or
permitted by law.
Amortized cost and fair values of securities available for sale as
December 31, 1993 are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury
Securities $ 9,090,948 $ 84,232 $ - $ 9,175,180
Securities of
Other U.S.
Government
Agencies 10,982,656 122,238 (1,775) 11,103,119
Mortgage-Backed
Securities 4,791,136 177,754 - 4,968,890
Other Securities 9,678,282 7,493 (60,405) 9,625,370
---------- ---------- ---------- ----------
Total $34,543,022 $ 391,717 $ (62,180) $34,872,559
========== ========== ========== ==========
</TABLE>
The amortized cost and fair value of securities available for sale as of
December 31, 1993 by contractual maturity are shown below. Maturities may
differ from contractual maturities in mortgage backed securities because the
mortgages underlying the securities may be called or repaid without any
penalties.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
----------- -----------
<S> <C> <C>
Within One Year $12,016,056 $12,111,159
One to Five Years 8,057,548 8,167,140
Five to Ten Years 2,759,760 2,781,834
After Ten Years 11,709,658 11,812,426
---------- ----------
$34,543,022 $34,872,559
========== ==========
</TABLE>
Gross realized gains and losses from the sale of securities for the
years ended December 31, 1993, 1992 and 1991 are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Realized gains $ 46,665 $ 397,375 $ 223,245
Realized losses - (203,850) (813,803)
</TABLE>
Securities available for sale with a carrying amount of $23,680,632 and
$-0- at December 31, 1993 and 1992, respectively, were pledged as collateral
on public deposits and for other purposes as required or permitted by law.
15
<PAGE> 65
Note D - Loans -
An analysis of the loan portfolio at December 31, 1993 and 1992, is as
follows:
<TABLE>
<CAPTION>
1993 1992
----------- -----------
<S> <C> <C>
Real Estate Loans - Construction $ 734,356 $ 310,559
Real Estate Loans - Mortgage 40,445,911 38,173,659
Loans to Farmers 5,931,360 6,984,103
Commercial or Industrial Loans 9,461,102 9,349,543
Loans to Individuals 5,708,783 6,162,248
All Other Loans 2,576,031 2,371,008
---------- ----------
Total Loans $64,857,543 $63,351,120
Unearned Income (115,124) (102,914)
---------- ----------
$64,742,419 $63,248,206
========== ==========
</TABLE>
During 1991, the Bank was the successful bidder on certain loans from
the Resolution Trust Corporation at a cost of $10,475,824. These loans are
subject to the same credit policies and loan review process as other loans
in the Bank's loan portfolio. These loans, net of any purchase discount,
are included in Total Loans.
The Bank is permitted under the laws of the State of Louisiana to make
extensions of credit to its officers, directors and their affiliates in the
ordinary course of business. An analysis of the aggregate of these loans
for 1993 and 1992, is as follows:
<TABLE>
<CAPTION>
1993 1992
----------- -----------
<S> <C> <C>
Balance - Beginning of Year $ 3,508,656 $ 2,832,193
New Loans 246,358 2,552,913
Repayment and Other Reductions (557,272) (1,876,450)
---------- ----------
Balance - End of Year $ 3,197,742 $ 3,508,656
========== ==========
</TABLE>
The Bank had non-performing loans on a non-accrual basis totaling
approximately $1,286,331 and $662,529 at December 31, 1993 and 1992. The
Bank recognized $40,077, $22,908 and $41,511 in interest income during the
years ended December 31, 1993, 1992 and 1991, relating to these loans. Had
the loans been performing, approximately $130,828, $67,547 and $100,041 of
additional interest income would have been recognized in 1993, 1992 and
1991, respectively. Loans contractually past due 90 days or more, in
addition to loans on nonaccrual, were $37,215 and $26,467 at December 31,
1993 and 1992.
16
<PAGE> 66
Note E - Allowance for Loan Losses -
Following is a summary of the activity in the allowance for loan losses:
<TABLE>
<CAPTION>
1993 1992 1991
----------- ---------- ----------
<S> <C> <C> <C>
Balance - Beginning of Year $ 708,207 $ 678,242 $ 728,375
Current Provision from
Income 220,000 140,000 75,000
Recoveries of Amounts
Previously Charged-Off 106,521 113,629 95,314
Amounts Charged-Off (200,826) (223,664) (220,447)
--------- --------- ---------
Balance - End of Year $ 833,902 $ 708,207 $ 678,242
========= ========= =========
Ratio of Reserve for
Possible Loan Losses
to Non-Performing
Loans at End of Year 64.83% 106.89% 57.72%
Ratio of Reserve for
Possible Loan Losses
to Loans Outstanding
at End of Year 1.29% 1.12% 1.15%
Ratio of Net Loans Charged
Off to Average Loans
Outstanding for the Year .15% .17% .24%
</TABLE>
Note F - Bank Premises and Equipment -
Bank premises and equipment costs and the related accumulated
depreciation at December 31, 1993 and 1992, are as follows:
<TABLE>
<CAPTION>
ACCUMULATED
ASSET COST DEPRECIATION NET
---------- ------------ ----------
<S> <C> <C> <C>
December 31, 1993:
Land $ 503,115 $ - $ 503,115
Bank Premises 2,357,554 1,145,627 1,211,927
Furniture and Equipment 2,491,766 1,717,328 774,438
--------- --------- ---------
$5,352,435 $2,862,955 $2,489,480
========= ========= =========
December 31, 1992:
Land $ 503,115 $ - $ 503,115
Bank Premises 2,345,917 1,063,854 1,282,063
Furniture and Equipment 2,333,377 1,519,966 813,411
--------- --------- ---------
$5,182,409 $2,583,820 $2,598,589
========= ========= =========
</TABLE>
The provision for depreciation charged to operating expenses was
$309,777, $292,243 and $288,972 for the three years ended December 31, 1993,
1992 and 1991, respectively.
17
<PAGE> 67
Note G - Deposits -
Following is a detail of deposits:
<TABLE>
<CAPTION>
1993 1992
------------ ------------
<S> <C> <C>
Demand Deposit Accounts $ 9,111,439 $ 9,776,774
NOW and Super NOW Accounts 36,553,267 34,103,220
Money Market Accounts 13,464,862 14,248,710
Savings Accounts 7,710,250 8,819,135
Certificates of Deposit Over $100,000 14,855,025 15,520,033
Other Certificates of Deposit 37,647,214 37,929,245
----------- -----------
$119,342,057 $120,397,117
=========== ===========
</TABLE>
Interest expense on certificates of deposit over $100,000 for the years
ended December 31, 1993, 1992 and 1991, amounted to approximately
$567,772, $725,141 and $1,129,738, respectively.
Public fund deposits at December 31, 1993 and 1992, were approximately
$20,662,774 and $19,274,111, respectively.
Note H - Stockholders' Equity and Regulatory Matters -
Dividends are paid by the Company from its assets which are provided
primarily by dividends from the Bank. Dividends are payable only out of
retained earnings and current earnings of the Company. Certain restrictions
exist regarding the ability of the Bank to transfer funds to the Company in
the form of cash dividends. Regulatory approval is required to pay
dividends in excess of the Bank's earnings in the current year plus retained
net profits for the preceding year. As of January 1, 1994, the Bank had
retained earnings of $9,692,119 of which $2,756,259 was available for
distribution without prior regulatory approval.
The Bank is also required to maintain minimum amounts of capital to
total risk weighted assets, as required by banking regulators. At December
31, 1993, the Bank is required to have minimum Tier 1 and Total Capital
ratios of 4.00% and 8.00%, respectively. The Bank's actual ratios at that
date were 22.23% and 23.44%, respectively. The Bank's Leverage Ratio at
December 31, 1993, was 11.19%.
Under current regulations, the Bank is limited in the amount it may loan
to its Parent. Loans to the Parent may not exceed 10% of the Bank's capital
and surplus.
Note I - Employee Benefits -
In January, 1990, the Board of Directors approved a plan to terminate
the Bank's noncontributory defined benefit pension plan effective March 31,
1990. An actuarial determination was made at the date of final approval,
and all plan participants were fully vested.
18
<PAGE> 68
Distributions were made to retired and terminated employees for their vested
benefits. The vested benefits of active employees were rolled over into the
Bank's new savings and stock bonus plan, discussed below. The remaining
plan assets less administrative expenses were transferred to the Bank as
reversion income calculated as follows:
<TABLE>
<S> <C>
Total Plan Assets $ 1,794,524
Distributions to Retired and
Terminated Employees (190,402)
Administrative Expenses (48,493)
----------
Plan Assets Available for
Distribution $ 1,555,629
Rollover to Savings and
Stock Bonus Plan (1,080,523)
----------
Reversion Income $ 475,106
Excise Tax on Reversion Income 71,266
----------
Net Reversion Income $ 403,840
==========
</TABLE>
The reversion income was received in 1991 and included in other income.
The excise tax expense is included in other operating expenses.
The Bank approved and began a Tax Deferred Defined Contributions
Employee Savings and Stock Bonus Plan in 1991 covering all employees who
qualify as to age and length of service. Covered employees may voluntarily
contribute 1% to 10% of gross pay to the plan's savings account with certain
limitations. Matching contributions of 100% of voluntary contributions up
to a maximum of 3% of gross pay are made by the Bank to the savings account.
In addition, the Bank may make discretionary contributions to the plan's
stock bonus account to be invested mainly in the Company's stock. Each
participant's share of this contribution will be based on the ratio of their
pay to the total pay of all participants. Vesting occurs at 20% per year
after one years participation with full vesting after six years. The Bank's
contributions to the plan's savings accounts were $50,094 and $43,226 in
1993 and 1992, respectively, and $41,564 and $41,307 to the plan's stock
bonus accounts in 1993 and 1992, respectively.
Effective July 1, 1989 the Board of Directors terminated a Directors'
Incentive Plan and approved a non-qualified Directors' Deferred Compensation
Plan to be informally funded through corporate owned life insurance. The
net cost of the plan charged to earnings was $9,700 in 1993, $160,841 in
1992, and $76,318 in 1991.
The Financial Accounting Standards Board issued Statement Number
106 - "Employers' Accounting for Postretirement Benefits Other Than
Pensions". The Company adopted this standard during 1993. The effect of
this statement on the financial statements of the Company was immaterial.
19
<PAGE> 69
Note J - Other Operating Expenses -
An analysis of Other Operating Expenses for the years ended
December 31, 1993, 1992 and 1991, is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Advertising $ 97,904 $ 132,745 $ 61,228
Equipment Expense 446,198 438,192 445,032
Federal Deposit Insurance
Assessment 272,715 260,564 242,323
Net Expense Deferred
Compensation Plans 9,700 238,537 110,415
Professional Fees 386,803 408,902 369,031
Stationery, Printing and
Supplies 124,410 147,952 116,168
Other 738,844 677,022 787,381
--------- --------- ---------
$2,076,574 $2,303,914 $2,131,578
========= ========= =========
</TABLE>
Note K - Federal Income Taxes -
The total provision for federal income taxes charged against income
before taxes amounted to $824,616, $563,245 and $83,872 for the years ended
December 31, 1993, 1992 and 1991, respectively. The provisions represent
effective tax rates of 29% in 1993, 23% in 1992 and 9% in 1991.
Following is a reconciliation between income tax expense based on the
federal statutory tax rates and income taxes reported in the statements of
income.
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Income Taxes Based on
Statutory Rates - 34% in
1993, 1992 and 1991 $ 973,165 $ 822,151 $ 329,664
Tax Exempt Income (16,775) (15,876) (62,110)
Other - Net (47,811) 86,031 (258,008)
Alternative Minimum Tax - - 74,326
Minimum Tax Credit Utilized (83,963) (329,061) -
--------- --------- ---------
Provision for Federal Income
Taxes $ 824,616 $ 563,245 $ 83,872
========= ========= =========
</TABLE>
Components of Provision for Federal Income Taxes:
<TABLE>
<S> <C> <C> <C>
Provision for Current Taxes $ 898,616 $ 563,245 $ 83,872
Provision for Deferred Taxes (74,000) - -
--------- --------- ---------
$ 824,616 $ 563,245 $ 83,872
========= ========= =========
</TABLE>
20
<PAGE> 70
Effective January 1, 1993, the Company adopted FASB Statement No. 109,
"Accounting for Income Taxes". As explained in Note A, Statement 109 adopts
a liability method that requires the recognition of deferred tax assets and
liabilities for the expected future consequences of events that have been
recognized in the Company's financial statements or tax returns. In
estimating future tax consequences, Statement 109 generally considers all
expected future events other than enactments of changes in tax laws or
rates. Previously, the Company used a liability method under FASB Statement
No. 96, but that method gave no recognition to future events other than the
recovery of assets and settlement of liabilities at their reported amounts.
The cumulative effect of the adjustments to adopt Statement 109 was
$392,000. This amount is reported as the cumulative effect of a change in
accounting principle on the accompanying 1993 Statement of Income.
A deferred income tax asset of $353,957 is included in other assets at
December 31, 1993. There is no deferred income tax asset at December 31,
1992, due to the limitation of recording deferred tax credits in the
financial statements under Statement 96.
The deferred tax provision (benefit) consists of the following timing
differences:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Depreciation Expense for Tax
Reporting in Excess of Amount
for Financial Reporting $ 8,138 $ (17,944) $ (17,287)
Provision for Loan Losses for
Financial Reporting in Excess
of Amount for Tax Reporting (42,736) (10,188) 40,452
Other Real Estate Write-offs for
Financial Reporting in Excess
of Amount for Tax Reporting 12,276 2,516 (834)
Deferred Compensation for Finan-
cial Reporting in Excess of
Tax Reporting (31,353) (124,747) (106,594)
Other (20,325) (3,337) 8,793
-------- -------- --------
$ (74,000) $(153,700) $ (75,470)
Deferred Tax Benefit not
Recognized - 153,700 75,470
-------- -------- --------
Provision (Benefit) for
Deferred Taxes $ (74,000) $ - $ -
======== ======== ========
</TABLE>
21
<PAGE> 71
The net deferred tax asset and liability consist of the following
components at December 31, 1993 and 1992:
<TABLE>
<S> <C> <C> <C>
Depreciation $(134,165) $(126,027) $(143,971)
Provision for Loan Losses 61,557 18,821 8,633
Other Real Estate 78,330 90,606 93,122
Deferred Compensation 469,937 438,584 313,837
Other (9,659) (29,984) (33,321)
Unrealized Gain on Securities
Available for Sale (112,043) - -
-------- -------- --------
Total Deferred Tax Asset
(Liability) $ 353,957 $ 392,000 $ 238,300
Deferred Tax Asset Not Recognized - (392,000) (238,300)
-------- -------- --------
Net Deferred Tax Asset
(Liability) $ 353,957 $ - $ -
======== ======== ========
</TABLE>
A valuation allowance was established on the deferred tax asset, until
in management's opinion the asset would more likely than not be realized.
Realization of deferred tax assets is dependent upon sufficient current and
future taxable income to allow for the reversal of temporary differences to
be available to reduce taxable income.
Note L - Off-Balance-Sheet Instruments -
The Company is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit
and letters of credit. Those instruments involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the balance
sheets.
The Company's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to extend credit
and letters of credit is represented by the contractual amount of those
instruments. The Bank uses the same credit policies in making commitments
and conditional obligations as they do for on-balance-sheet instruments.
In the normal course of business the Company has made commitments to
extend credit of $11,448,269 at December 31, 1993. This amount includes
unfunded loan commitments aggregating $11,294,996 and letters of credit of
$153,273.
22
<PAGE> 72
Note M - Concentrations of Credit -
All of the Bank's business activities are with customers in the Bank's
market area, which consists primarily of Pointe Coupee, East Baton Rouge,
and adjacent parishes. The majority of such customers are depositors of the
Bank. The concentrations of credit by type of loan are shown in Note D.
Most of the Bank's credits are to individuals, farmers, and small businesses
secured by real estate. The Bank, as a matter of policy, does not extend
credit to any single borrower or group related borrowers in excess of
$1,200,000.
Note N - Contingencies -
In the normal course of business, the Company is involved in various
legal proceedings. In the opinion of management and counsel, any liability
resulting from such proceedings would not have a material adverse effect on
the Company's financial statements.
23
<PAGE> 73
Note O - Financial Statements - Parent Company Only -
The financial statements for BNR Bancshares, Inc. (Parent Company) are
as follows:
BALANCE SHEETS
December 31, 1993 and 1992
<TABLE>
<CAPTION>
1993 1992
----------- -----------
<S> <C> <C>
Assets:
Cash $ 126,979 $ 26,459
Investment in Subsidiary 15,409,613 13,624,751
Other Assets 1,700 -
---------- ----------
Total Assets $15,538,292 $13,651,210
========== ==========
Stockholders' Equity:
Common Stock $ 3,375,000 $ 3,375,000
Surplus 3,812,500 3,812,500
Retained Earnings 8,789,547 6,957,965
Treasury Stock (438,755) (494,255)
---------- ----------
Total Stockholders' Equity $15,538,292 $13,651,210
========== ==========
</TABLE>
24
<PAGE> 74
STATEMENTS OF INCOME
for the years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Income:
Dividend from Subsidiary $ 865,545 $ 674,436 $ 487,077
Other Interest Income 1,116 85 647
--------- --------- ---------
$ 866,661 $ 674,521 $ 487,724
Expenses:
Operating Expenses $ 6,096 $ 8,565 $ 16,656
--------- --------- ---------
Income before Income Taxes and
Equity in Undistributed Net
Income of Subsidiary $ 860,565 $ 665,956 $ 471,068
Income Tax Expense (Benefit) (1,700) - -
--------- --------- ---------
Income before Equity in
Undistributed Net Income
of Subsidiary $ 862,265 $ 665,956 $ 471,068
Equity in Undistributed Net
Income of Subsidiary 1,567,368 1,188,891 414,661
--------- --------- ---------
Net Income $2,429,633 $1,854,847 $ 885,729
========= ========= =========
</TABLE>
25
<PAGE> 75
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows From Operating
Activities:
Net Income $ 2,429,633 $ 1,854,847 $ 885,729
Adjustments to Reconcile
Net Income to Net Cash
Provided by Operating
Activities:
Equity in Undistributed
Net Income of Sub-
sidiary (1,567,368) (1,188,891) (414,661)
(Increase) Decrease in
Other Assets (1,700) - -
---------- ---------- ----------
Net Cash Provided
by Operating
Activities $ 860,565 $ 665,956 $ 471,068
Cash Flows From Financing
Activities:
Proceeds from Issuance
of Treasury Stock $ 55,500 $ - $ -
Dividends Paid (815,545) (649,436) (487,077)
---------- ---------- ----------
Net Cash Used
in Financing
Activities $ (760,045) $ (649,436) $ (487,077)
---------- ---------- ----------
Increase (Decrease) in Cash $ 100,520 $ 16,520 $ (16,009)
Cash - Beginning of Year 26,459 9,939 25,948
---------- ---------- ----------
Cash - End of Year $ 126,979 $ 26,459 $ 9,939
========== ========== ==========
</TABLE>
26
<PAGE> 76
Note P - Financial Statements - Wholly-Owned Bank Subsidiary -
The financial statements for the Bank of New Roads, a wholly-owned
subsidiary of BNR Bancshares, Inc., are presented below:
CONDENSED BALANCE SHEETS
December 31, 1993 and 1992
<TABLE>
<CAPTION>
1993 1992
------------ ------------
<S> <C> <C>
Assets:
Cash and Due from Banks $ 3,376,570 $ 3,698,079
Securities 61,602,581 62,569,373
Loans 63,908,517 62,539,999
Bank Premises and Equipment 2,489,480 2,598,589
Other Assets 5,339,440 5,029,988
----------- -----------
Total Assets $136,716,588 $136,436,028
=========== ===========
Liabilities:
Deposits $119,469,036 $120,423,576
Other Liabilities 1,837,939 2,387,701
----------- -----------
Total Liabilities $121,306,975 $122,811,277
Stockholders' Equity:
Common Stock $ 1,687,500 $ 1,687,500
Surplus 3,812,500 3,812,500
Retained Earnings 9,692,119 8,124,751
Unrealized Gain on Securities
Available for Sale, Net 217,494 -
----------- -----------
Total Stockholders' Equity $ 15,409,613 $ 13,624,751
----------- -----------
Total Liabilities and
Stockholders' Equity $136,716,588 $136,436,028
=========== ===========
</TABLE>
27
<PAGE> 77
CONDENSED STATEMENTS OF INCOME
for the years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Interest Income $10,131,339 $10,479,065 $11,244,989
Interest Expense 3,350,822 3,987,392 5,995,826
---------- ---------- ----------
Net Interest Income $ 6,780,517 $ 6,491,673 $ 5,249,163
Provision for Loan Losses 220,000 140,000 75,000
---------- ---------- ----------
Net Interest Income after
Provision for Loan Losses $ 6,560,517 $ 6,351,673 $ 5,174,163
Other Income 1,007,259 1,033,366 618,820
Other Expenses 4,700,547 4,958,467 4,807,373
---------- ---------- ----------
Income before Income Taxes
and Cumulative Effect of
a Change in Accounting
Principle $ 2,867,229 $ 2,426,572 $ 985,610
Applicable Income Tax Expense 826,316 563,245 83,872
---------- ---------- ----------
Income before Cumulative
Effect of a Change in
Accounting Principle $ 2,040,913 $ 1,863,327 $ 901,738
Cumulative Effect of the
Change in the Method of
Accounting for Income Taxes 392,000 - -
---------- ---------- ----------
Net Income $ 2,432,913 $ 1,863,327 $ 901,738
========== ========== ==========
</TABLE>
28
<PAGE> 78
CONDENSED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 2,432,913 $ 1,863,327 $ 901,738
Adjustments to Reconcile Net
Income to Net Cash Provided by
Operating Activities:
Cumulative Effect of a Change
in Accounting Principle (392,000) - -
Provision (Credit) for
Deferred Tax (74,000) - -
Provision for Depreciation 309,777 292,243 288,972
Provision for Loan Losses 220,000 140,000 75,000
Provision for Other Real Estate 14,500 4,500 23,500
Amortization (Accretion) of
Investments 159,229 279,150 (92,909)
Gain on Sale of Securities (46,665) (193,524) 590,558
(Gain) Loss on Sale of Other
Assets (9,769) 12,981 119,739
Other - 1,339 9,889
(Increase) Decrease in Other
Assets (556,068) (421,482) (387,360)
Increase (Decrease) in Other
Liabilities (549,762) 903,715 137,169
----------- ----------- -----------
Net Cash Provided by
Operating Activities $ 1,508,155 $ 2,882,249 $ 1,666,296
Cash Flows From Investing Activities:
Net (Increase) Decrease in Federal
Funds Sold $ (2,350,000) $ 2,875,000 $ 3,250,000
Purchase of Securities (18,839,723) (29,140,068) (34,981,514)
Proceeds from Sales and Maturities
of Securities 22,373,488 27,567,975 35,377,716
Net (Increase) Decrease in Loans (1,487,757) (4,762,847) (6,191,256)
Purchase of Bank Premises and
Equipment (203,868) (483,480) (582,773)
Sale of Other Assets 498,281 343,100 765,845
----------- ----------- -----------
Net Cash Used in Investing
Activities $ (9,579) $ (3,600,320) $ (2,361,982)
Cash Flows From Financing Activities:
Net Increase (Decrease) in Demand
Deposits, NOW Accounts and
Savings Accounts $ (7,501) $ 4,228,320 $ 2,041,402
Net Increase (Decrease) in
Certificates of Deposit (947,039) (3,460,615) (681,410)
Cash Dividends (865,545) (674,436) (487,077)
----------- ----------- -----------
Net Cash Provided by
(Used in) Financing
Activities $ (1,820,085) $ 93,269 $ 872,915
----------- ----------- -----------
</TABLE>
(CONTINUED)
29
<PAGE> 79
<TABLE>
<CAPTION>
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Increase (Decrease) in Cash
and Due from Banks $ (321,509) $ (624,802) $ 177,229
Cash and Due from Banks -
Beginning of Year 3,698,079 4,322,881 4,145,652
----------- ----------- -----------
Cash and Due from Banks -
End of Year $ 3,376,570 $ 3,698,079 $ 4,322,881
=========== =========== ===========
Supplemental Disclosures of
Cash Flow Information:
Cash Payments for:
Interest Paid to
Depositors $ 3,380,576 $ 4,176,841 $ 6,072,434
=========== =========== ===========
Income Tax Payments
(Refunds) $ 1,395,732 $ (36,633) $ 306,392
=========== =========== ===========
Supplemental Disclosures of
Cash Flow Information:
Non Cash Investing
Activities:
Increase (Decrease) in
Other Real Estate
Acquired in Settle-
ment of Loans $ (100,761) $ 191,533 $ 151,924
=========== =========== ===========
Non Cash Financing
Activities:
(Increase) Decrease
in Unrealized Loss
on Noncurrent
Marketable Equity
Securities $ - $ 252,500 $ 225,000
=========== =========== ===========
Unrealized Gain on
Securities Available
for Sale $ 329,537 $ - $ -
=========== =========== ==========
Deferred Tax Effect on
Unrealized Gain on
Securities Available
for Sale $ 112,043 $ - $ -
=========== =========== ==========
</TABLE>
30
<PAGE> 80
QUARTERLY REPORT OF BNR BANCSHARES,
INC. ON FORM 10-Q FOR THE QUARTER
ENDED MARCH 31, 1994
<PAGE> 81
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
-----------------------------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
-----------------------------------
For Quarter Ended March 31, 1994 Commission File Number: 0-11782
BNR BANCSHARES, INC.
------------------------------------------------------
(Exact Name of registrant as specified in its charter)
Louisiana 72-0954582
------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
107 East Main Street
New Roads, Louisiana 70760
---------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 638-3791
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $10.00 Par Value
(Title of Class)
None
--------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
--- ---
State the aggregate market value of the voting stock held by
nonaffiliates* of the registrant: $15,094,847 (275,102 Shares @
$54.87 per Share)
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $10 par value, 326,218 outstanding as of March 31, 1994
*For purposes of the computation, shares owned by executive officers,
directors, and 5% shareholders have been excluded.
<PAGE> 82
I N D E X
PART I - Financial Information
Financial Statements
Consolidated Balance Sheet -
March 31, 1994, December 31, 1993 and March 31, 1993................ 3
Consolidated Statement of Income -
For the three months ended March 31, 1994 and 1993.................. 4
Consolidated Statement of Changes in Stockholders' Equity -
For the three months ended March 31, 1994 and 1993.................. 5
Consolidated Statement of Cash Flows -
For the three months ended March 31, 1994 and 1993.................. 6
Notes to Consolidated Financial Statements.............................. 7-11
Management's Responsibility for Financial Reporting..................... 12
Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................... 13-19
PART II - Other Information
Signatures.............................................................. 21
<PAGE> 83
PART I - FINANCIAL INFORMATION
<PAGE> 84
BNR BANCSHARES, INC. And Its Wholly Owned Subsidiary, Bank of New Roads
CONSOLIDATED BALANCE SHEET
March 31, 1994, December 31, 1993 and March 31, 1993
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
ASSETS March 31, 1994 Dec. 31, 1993 March 31, 1993
-------------- ------------- --------------
<S> <C> <C> <C>
Cash and Due from Banks....................................... $ 4,092,087 $ 3,376,570 $ 3,484,933
Federal Funds Sold and Securities Purchased under
Agreement to Resale......................................... 3,850,000 4,750,000 4,375,000
Investment Securities:
Held to Maturity (Fair Value $26,017,653, $22,759,712, and
$63,430,886).............................................. $ 25,884,151 $ 21,980,022 $ 61,681,569
Available for Sale (Fair Value $38,480,377 and $34,872,559). 38,480,377 34,872,559 -
----------- ----------- -----------
$ 64,364,528 $ 56,852,581 $ 61,681,569
Loans......................................................... $ 64,701,955 $ 65,357,142 $ 65,172,379
Less: Unearned Discount.................................... (597,458) (614,723) (735,435)
Allowance for Loan Losses............................ (872,794) (833,902) (720,797)
----------- ----------- -----------
$ 63,231,703 $ 63,908,517 $ 63,716,147
Bank Premises and Equipment................................... $ 2,416,696 $ 2,489,480 $ 2,594,803
Other Real Estate............................................. 72,480 133,220 218,433
Accrued Interest Receivable................................... 1,023,531 1,133,619 1,281,017
Other Assets.................................................. 3,636,114 4,074,301 3,074,059
----------- ----------- -----------
TOTAL ASSETS $142,687,139 $136,718,288 $140,425,961
=========== =========== ===========
LIABILITIES
Deposits:
Non-Interest Bearing Demand Deposits........................ $ 9,727,513 $ 9,111,439 $ 8,323,159
Interest Bearing Deposits................................... 115,593,291 110,230,618 115,829,236
----------- ----------- -----------
$125,320,804 $119,342,057 $124,152,395
Accrued Interest Payable...................................... 269,593 310,009 317,975
Other Liabilities............................................. 1,465,123 1,527,930 1,650,573
----------- ----------- -----------
TOTAL LIABILITIES $127,055,520 $121,179,996 $126,120,943
STOCKHOLDERS' EQUITY
Capital Accounts:
Common Stock - $10 par value; authorized 5,000,000 shares;
Issued 337,500 shares..................................... $ 3,375,000 $ 3,375,000 $ 3,375,000
Surplus..................................................... 3,812,500 3,812,500 3,812,500
Net Unrealized Gain (Loss) on Securities Available for Sale. (93,492) 217,494 -
Undivided Profits........................................... 8,976,366 8,572,053 7,556,273
Treasury Stock - 11,282 shares at cost...................... (438,755) (438,755) (438,755)
----------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY.................................. $ 15,631,619 $ 15,538,292 $ 14,305,018
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $142,687,139 $136,718,288 $140,425,961
=========== =========== ===========
</TABLE>
3
<PAGE> 85
BNR BANCSHARES, INC. And Its Wholly Owned Subsidiary, Bank of New Roads
CONSOLIDATED STATEMENT OF INCOME
For the three months ended March 31, 1994 and 1993
<TABLE>
<CAPTION>
(Unaudited)
March 1994 March 1993
---------- ----------
<S> <C> <C>
INTEREST INCOME:
Interest and Fees on Loans......................................................... $1,497,073 $1,586,304
Interest on Investment Securities:
Taxable Interest................................................................. 880,029 1,030,214
Nontaxable Interest.............................................................. 15,976 4,775
--------- ---------
896,005 1,034,989
Other Interest Income.............................................................. - -
--------- ---------
TOTAL INTEREST INCOME........................................................... $2,393,078 $2,621,293
Interest Expense on Deposits......................................................... 804,396 887,449
Interest on Federal Funds Purchased.................................................. - 237
--------- ---------
Net Interest Income................................................................ $1,588,682 $1,733,607
Provision for Loan Losses............................................................ 90,000 40,000
--------- ---------
Net Interest Income After Provision for Loan Losses................................ $1,498,682 $1,693,607
OTHER INCOME:
Service Charges on Deposit Accounts................................................ $ 182,347 $ 164,479
Gain (Loss) on Investment Securities - Net......................................... 107,951 29,502
Other Operating Income............................................................. 82,434 85,060
--------- ---------
TOTAL OTHER INCOME.............................................................. $ 372,732 $ 279,041
--------- ---------
Income before Other Expenses.................................................. $1,871,414 $1,972,648
OTHER EXPENSES:
Salaries and Employee Benefits..................................................... $ 589,326 $ 531,987
Occupancy Expense.................................................................. 211,033 209,910
Net Other Real Estate Expense...................................................... 354 3,596
Other Operating Expenses........................................................... 503,864 450,531
--------- ---------
TOTAL OTHER EXPENSES............................................................ $1,304,577 $1,196,024
--------- ---------
Income before Income Taxes...................................................... $ 566,837 $ 776,624
Applicable Income Taxes.............................................................. 162,524 178,316
--------- ---------
NET INCOME...................................................................... $ 404,313 $ 598,308
========= =========
Earnings Per Share:
NET INCOME $ 1.24 $ 1.84
========= =========
Cash Dividend Per Share: $ - $ -
========= =========
</TABLE>
4
<PAGE> 86
BNR BANCSHARES, INC. And Its Wholly Owned Subsidiary, Bank of New Roads
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the three months ended March 31, 1994 and 1993
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
COMMON STOCK: March 1994 March 1993
---------- ----------
<S> <C> <C>
Balance - Beginning and End of Period $3,375,000 $3,375,000
========= =========
SURPLUS:
Balance - Beginning and End of Period $3,812,500 $3,812,500
========= =========
NET UNREALIZED GAIN (LOSS) ON SECURITIES AVAILABLE FOR SALE:
Balance - Beginning of Period $ 217,494 $ -
Charge for Market Gains (Losses) (310,986) -
--------- ---------
Balance - End of Period $ ( 93,492) $ -
========= =========
RETAINED EARNINGS:
Balance - Beginning of Period $8,572,053 $6,957,965
Net Income 404,313 598,308
--------- ---------
Balance - End of Period $8,976,366 $7,556,273
========= =========
TREASURY STOCK:
Balance - Beginning of Period $ (438,755) $ (494,255)
Issuance of 1,500 shares at $37.00 per share - 55,500
--------- ---------
Balance - End of Period $ (438,755) $ (438,755)
========= =========
</TABLE>
5
<PAGE> 87
BNR BANCSHARES, INC. And Its Wholly Owned Subsidiary, Bank of New Roads
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the three months ended March 31, 1994 and 1993 (Unaudited) (Unaudited)
March 1994 March 1993
---------- ----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 404,313 $ 598,308
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Depreciation and Amortization.................................... 76,187 73,509
Provision for Loan Losses...................................................... 90,000 40,000
Provision for Losses on Other Real Estate...................................... - 14,500
Amortization (Accretion) of Investment Securities Premium (Discounts).......... (16,189) 57,352
(Gain) Loss on Sale of Investment Securities................................... (107,951) (29,502)
(Gain) Loss on Sale of Bank Premises and Equipment............................. - (3,337)
(Gain) Loss on Sale of Other Real Estate....................................... 4,561 (6,737)
(Increase) Decrease in Interest Receivable..................................... 110,088 23,345
(Increase) Decrease in Other Assets............................................ 598,438 (82,226)
Increase (Decrease) in Interest Payable........................................ (40,416) (21,788)
Increase (Decrease) in Other Liabilities....................................... (62,852) (397,365)
---------- ----------
Net Cash Provided by Operating Activities................................. $ 1,056,179 $ 266,059
Cash Flows from Investing Activities:
Net (Increase) Decrease in Federal Funds Sold...................................... $ 900,000 $ (1,975,000)
Purchase of Investment Securities.................................................. (14,909,872) (8,418,073)
Proceeds from Sales of Investment Securities....................................... 4,050,873 2,843,027
Proceeds from Maturities of Investment Securities.................................. 3,000,000 4,035,000
Net (Increase) Decrease in Loans................................................... 580,844 (1,216,147)
Purchase of Bank Premises and Equipment............................................ (3,403) (72,099)
Proceeds from Sale of Bank Premises and Equipment.................................. - 5,713
Proceeds from Sale of Other Real Estate............................................ 62,149 507,596
---------- ----------
Net Cash Provided by (Used in) Investing Activities....................... $ (6,319,409) $ (4,289,983)
Cash Flows from Financing Activities:
Net Increase (Decrease) in Demand Deposits, NOW Accounts and Savings Accounts...... $ 6,686,159 $ 3,636,097
Net Increase (Decrease) in Certificates of Deposit................................. (707,412) 119,181
Issuance of Treasury Stock......................................................... - 55,500
---------- ----------
Net Cash Provided by (Used In) Financing Activities....................... $ 5,978,747 $ 3,810,778
---------- ----------
Increase (Decrease) in Cash and Due from Banks....................................... $ 715,517 $ (213,146)
Cash and Due from Banks - Beginning of Quarter....................................... 3,376,570 3,698,079
---------- ----------
Cash and Due from Banks - End of Quarter............................................. $ 4,092,087 $ 3,484,933
========== ==========
Supplemental Disclosure of Cash Flow Information:
Cash Payments for:
Interest Paid to Depositors...................................................... $ 804,396 $ 887,449
Income Tax Payments (Refunds).................................................... $ - $ -
Supplemental Disclosure of Cash Flow Information:
Non Cash Investing Activities:
Increase (Decrease) in Other Real Estate Acquired in Settlement of Loans......... $ (21,679) $ (141,528)
=========== ===========
Unrealized Gain (Loss) on Securities Available for Sale.......................... $ (471,192) $ -
=========== ===========
Deferred Tax Effect on Unrealized Gain (Loss) on Securities Available for Sale... $ (160,206) $ -
=========== ===========
</TABLE>
6
<PAGE> 88
BNR BANCSHARES, INC. And Its Wholly Owned Subsidiary, BANK OF NEW ROADS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1994 and March 31, 1993 (Unaudited)
ACCOUNTING POLICIES
The accounting principles followed by BNR Bancshares, Inc. and its
wholly-owned subsidiary, Bank of New Roads, are those which are generally
practiced within the banking industry. The methods of applying those
principles conform with generally accepted accounting principles and have been
applied on a consistent basis. The principles which significantly affect the
determination of financial position, results of operations, changes in
stockholders' equity and cash flows are summarized below.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of BNR
Bancshares, Inc. (the Company), and its wholly-owned subsidiary, Bank of New
Roads (the Bank). All material intercompany accounts and transactions have
been eliminated. Certain reclassifications to previously published financial
statements have been made to comply with current reporting requirements.
INVESTMENT SECURITIES
Securities classified as held to maturity are those debt securities the
Bank has both the intent and ability to hold to maturity regardless of changes
in market conditions, liquidity needs or changes in general economic
conditions. These securities are carried at cost adjusted for amortization of
premium and accretion of discount, computed by various methods approximating
the interest method over their contractual lives. Securities classified as
available for sale are those debt securities that the Bank intends to hold for
an indefinite period of time but not necessarily to maturity. Any decision to
sell a security classified as available for sale would be based on various
factors, including significant movements in interest rates, changes in the
maturity mix of the Bank's assets and liabilities, liquidity needs, regulatory
capital considerations, and other similar factors. Securities available for
sale are carried at fair value. Unrealized
7
<PAGE> 89
gains or losses are reported as increases or decreases in stockholders' equity,
net of the related deferred tax effect. Realized gains or losses, determined
on the basis of the cost of specific securities sold, are included in earnings.
The Bank does not engage in trading activities.
LOANS
Loans are stated at principal amounts outstanding, less unearned income
and allowance for loan losses. Interest on commercial loans is accrued daily,
based on the principal outstanding. Interest on installment loans is
recognized and included in interest income using the sum-of-the-digits method,
which does not differ materially from the interest method.
The Bank discontinues the accrual of interest income when a loan becomes
90 days past due as to principal or interest. When a loan is placed on
non-accrual status, previously recognized but uncollected interest is reversed
to income or charged to the allowance for loan losses. If the underlying
collateral value is sufficient to cover the principal balance and accrued
interest, the Bank may decide to continue the accrual of interest.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is an amount which in management's judgment
is adequate to absorb potential losses in the loan portfolio. The allowance
for loan losses is based upon management's review and evaluation of the loan
portfolio. Factors considered in the establishment of the allowance for loan
losses include management's evaluation of specific loans; the level and
composition of classified loans; historical loss experience; results of
examinations by regulatory agencies; an internal asset review process;
expectations of future economic conditions and their impact on particular
borrowers; and other judgmental factors.
The allowance for loan losses is based on estimates of potential future
losses, and ultimate losses may vary from the current estimates. These
estimates are reviewed periodically and as adjustments become necessary, the
effect of the change in estimate is charged to operating expenses in the period
incurred. All losses are charged to the allowance for loan losses when the
loss actually occurs or when management believes that the collectibility of the
principal is unlikely. Recoveries are credited to the allowance at the
8
<PAGE> 90
time of recovery.
BANK PREMISES AND EQUIPMENT
Bank premises and equipment are stated at cost less accumulated
depreciation. Depreciation is provided at rates based upon estimated useful
service lives using the straight-line method for financial reporting purposes
and accelerated methods for income tax purposes.
The costs of assets retired or otherwise disposed of and the related
accumulated depreciation are eliminated from the accounts in the year of
disposal and the resulting gains or losses are included in current operations.
Expenditures for maintenance and repairs are charged to operations as
incurred. Costs of major additions and improvements are capitalized.
OTHER REAL ESTATE
Other Real Estate is comprised of properties acquired through foreclosure.
The carrying value of these properties is the lower of cost or fair market
value. Loan losses arising from the acquisition of these properties are
charged against the allowance for loan losses.
Any subsequent market reductions required are charged to other real estate
expense. Revenues and expenses associated with maintaining or disposing of
foreclosed properties are recorded during the period in which they are
incurred.
INCOME TAXES
The provision for income taxes is based on income as reported in the
financial statements after interest income from state and municipal securities
is excluded. Also certain items of income and expenses are recognized in
different time periods for financial statement purposes than for income tax
purposes. Thus provisions for deferred taxes are recorded in recognition of
such timing differences.
Deferred taxes are provided on a liability method whereby deferred tax
assets are recognized for deductible temporary differences and operating loss
and tax credit carryforwards and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance
9
<PAGE> 91
when, in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax laws and
rates on the date of enactment.
The Company and its subsidiary file a consolidated federal income tax
return. In addition, state income tax returns are filed individually by
company in accordance with state statutes.
EARNINGS PER COMMON SHARE
The computation of earnings per share and other per share amounts of
common stock is based on the weighted average number of shares of common stock
outstanding during each year, which is 326,218 in 1994, 326,093 in 1993 and
324,518 in 1992.
STATEMENTS OF CASH FLOWS
For purposes of reporting cash flows, cash and due from banks includes
cash on hand and amounts due from banks (including cash items in process of
clearing).
CURRENT ACCOUNTING DEVELOPMENTS
In December, 1991, the Financial Accounting Standards Board issued
Statement No. 107, "Disclosures about Fair Value of Financial Instruments."
This statement requires disclosure of the fair value of financial instruments,
both assets and liabilities, whether or not such instruments are recognized in
the Balance Sheet. As it relates to the Company, financial instruments include
primarily cash equivalents, securities, loans, and deposits. SFAS No. 107 must
be adopted by the Company no later than July 1, 1995.
The Financial Accounting Standards Board has issued Statement No. 114,
"Accounting by Creditors for Impairment of a Loan", which becomes effective for
years beginning after December 15, 1994. Earlier application is permitted.
The Statement generally requires impaired loans to be measured on the present
value of expected future cash flows discounted at the loan's effective interest
rate.
PROPOSED MERGER
On March 16, 1994, the Company entered into a nonbinding letter of
intent and a memorandum of understanding with First Alabama Bancshares, Inc.
("First Alabama"), a bank
10
<PAGE> 92
holding company with its principal office in Birmingham, Alabama, pursuant to
which the Company will merge with and into First Alabama and the Bank will
become a wholly owned subsidiary of First Alabama. A definitive merger
agreement with respect to the transaction was executed on April 21, 1994. The
proposed merger is subject to various conditions, including approval by the
shareholders of the Company and by certain regulatory agencies. The agreement
contemplates that the shareholders of the Company will receive shares of First
Alabama common stock valued at $26,000,000.00, subject to adjustment under
certain circumstances. If the merger is consummated, the Bank is expected to
continue to be operated by current management of the Bank as a first tier
subsidiary of First Alabama until combined with other banking subsidiaries of
First Alabama operating in Louisiana. Shareholders of First Alabama approved
the changing of its name to Regions Financial Corporation, effective May 2,
1994.
11
<PAGE> 93
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The management of the Company and the Bank is responsible for the
preparation of the financial statements, related financial data and other
information in this quarterly report. The financial statements are prepared in
accordance with generally accepted accounting principles and include some
amounts that are necessarily based on management's informed estimates and
judgments, with consideration given to materiality. All financial information
contained in this quarterly report is consistent with that in the financial
statements.
Management fulfills its responsibility for the integrity, objectivity,
consistency and fair presentation of the financial statement and financial
information through an accounting system and related internal accounting
controls that are designed to provide reasonable assurance that assets are
safeguarded and that transactions are authorized and recorded in accordance
with established policies and procedures. The concept of reasonable assurance
is based on the recognition that the cost of a system of internal accounting
controls should not exceed the related benefits. As an integral part of the
system of internal accounting controls, the Company and the Bank have a
professional staff, including an internal auditor, who monitors compliance with
and assess the effectiveness of the system of internal accounting controls and
coordinate audit coverage with the independent public accountants.
The Audit Committee of the Board of Directors, composed solely of outside
directors, meets periodically with management, and the independent public
accountants to review matters relating to financial reporting, internal
accounting control and the nature, extent and results of the audit effort. The
internal auditor and the independent public accountants have direct access to
the Audit Committee with or without management present.
The financial statements as of December 31, 1993 were examined by Hannis
T. Bourgeois & Co., independent public accountants, who rendered an independent
professional opinion on the financial statements prepared by management. The
financial statements as of March 31, 1994 have not been reviewed by Hannis T.
Bourgeois & Co.
12
<PAGE> 94
BANCSHARES, INC. And Its Wholly Owned Subsidiary, BANK OF NEW ROADS
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion and analysis is intended to highlight the
significant factors affecting the Company's Consolidated Balance Sheets and
Statements of Income presented in this Report. This discussion is designed to
give readers a more comprehensive review of the operating results and financial
position than would be obtained from an examination of the financial statements
alone. This commentary should be used in conjunction with the consolidated
financial statements and the accompanying notes.
NET INTEREST INCOME
The primary source of earnings for the Company is net interest income,
which is the difference between interest and fees generated from
interest-earning assets and the interest costs associated with interest-bearing
liabilities. For analytical purposes, net interest income is presented on a
tax equivalent basis. Certain earning assets are exempt from income taxes,
therefore a tax equivalent adjustment is included so that interest-earning tax
exempt assets will be comparable with other earning assets. The primary
factors that affect net interest income are the changes in volume and mix of
earning assets and interest-bearing liabilities, along with changes in market
interest rates. Interest rates are trending upward in 1994, after significant
decreases in 1993 and 1992.
Total interest income for the three months ended March 1994 was $2.4
million as compared to $2.6 million for 1993. The Company's total earning
assets as of March 1994 increased $1.8 million as compared to the same period
in 1993. The increase in earning assets was offset by declining interest rates
to account for this change. Total interest expense in the first quarter of
1994 was $83,290 less than the same period of 1993. Average interest-bearing
liabilities declined slightly in 1994 as did interest rates to account for this
reduction in interest expense.
Net interest income for the three months ended March 31, 1994 was $1.6
million, a $145,000 decrease compared to the first quarter of 1993. The net
interest margin (net interest income divided by average interest-earning
assets) for 1994 was 4.91% compared to
13
<PAGE> 95
5.38% for the same period 1993. The decrease in the margin in the
current quarter as compared to the corresponding quarter of 1993 was the result
of lower interest rates in general and more particularly on the reinvestment
rates on securities maturing.
EARNING ASSETS
Earning assets were $132.3 million at March 31, 1994, an increase of $1.8
million, or 1.4% compared to the March 31, 1993 balance of $130.5 million. At
March 31, 1994, net loans totaled $63.2 million, a $.5 million decrease from
the balance reported in 1993. The decrease in loans was due to reduced
agricultural loan demand primarily in the Pointe Coupee Parish market.
Investment securities totaled $64.4 million at March 31, 1994,
representing an increase of $2.7 million, or 4.2% when compared to March 31,
1993. The increase in the investment securities resulted from an increase in
the Company's deposit base and a decrease in loans. The Company has increased
its holdings of U. S. Treasury and U. S. Government Agency securities and
reduced its emphasis on mortgage backed securities. This action was taken to
increase liquidity and improve the quality of its portfolio.
The Company's total investment portfolio had an unrealized loss of $8,153 or
.01%, as of March 31, 1994 and an unrealized gain of $1,749,317 or 2.84% as of
March 31, 1993. These figures represent a point in time and can change
depending on current market rates.
INTEREST-BEARING LIABILITIES
Interest-bearing liabilities for the period ending March 31, 1994 totaled
$115.6 million, a decrease of $.2 million, or .17% compared to 1993. The
majority of the decline came in the public funds sector.
ALLOWANCE AND PROVISION FOR LOAN LOSSES
An adequate level of the allowance for loan losses (reserve) is determined
by reviewing the quality of the loan portfolio, actual loan loss experience and
the current and anticipated economic conditions and their effect on the market
served by the Company. The provision for possible loan losses is the amount
charged to earnings in order to maintain an adequate level of allowance. Other
significant factors considered in determining the levels of the provision and
the reserve are the growth or decline in the loan portfolio, the
14
<PAGE> 96
composition of the portfolio, differing risks associated with each type of
loans, the current and prospective financial condition of borrowers, and the
level of past due and nonperforming loans. Management reviews the loan
portfolio to identify potential losses and to determine that the level of
reserve adequately reflects the potential loss exposure. Loans identified as
problem credits are reviewed more frequently to determine potential changes in
the reserve. Since actual losses may vary from current assessments, any
necessary adjustments to the reserve are recorded in the periods in which they
become known.
The Reserve totaled $872,794 at March 31, 1994 as compared to $720,797 for
the same period in 1993. The increase in the reserve for the period reflects
management's continued evaluation of the potential risk and the growth in the
loan portfolio. Management believes that the reserve is adequate to cover
possible losses in the loan portfolio. The reserve as a percentage of loans
was 1.36% at March 31, 1994 and 1.12% in 1993.
The Company's net charge offs for the first quarter periods were $51,108
and $27,410 for 1994 and 1993, respectively. The provision for loan losses was
$90,000 and $40,000 for the quarter ended March 31, 1994 and 1993,
respectively. The amount of contributions to the provision reflects
management's current evaluation of the reserve adequacy to cover potential loss
exposure.
<TABLE>
<CAPTION>
Three Months Ended March 31
1994 1993
---------- ----------
<S> <C> <C>
Balances at Beginning of Period $ 833,902 $ 708,207
Additions Charged to Operating Expense 90,000 40,000
Recoveries on Loans and Leases Previously Charged Off 44,785 39,809
Less Loans and Leases Charged Off (95,893) (67,219)
--------- ---------
Balances at End of Period $ 872,794 $ 720,797
========= =========
Reserve as a Percent of Loans 1.36% 1.12%
==== ====
</TABLE>
15
<PAGE> 97
NONPERFORMING LOANS
Non-performing loans consist of loans placed on non-accrual of interest
status and renegotiated loans that are not on non-accrual. It is the policy
of the Bank to automatically place loans on non-accrual of interest status when
the loan becomes past due as to principal or interest payments for 90 days.
Student loans, which are government guaranteed, are not placed on non-accrual
status. When a loan is placed on non-accrual status, interest accrued but not
collected is usually reversed against interest income. Payments received on
non-accrual loans are generally applied to principal first. Loans are not
reclassified as accruing until interest and principal payments are brought
current and future payments are reasonably assured.
The following table presents information on the amount of non-performing
loans at March 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Loans accounted for on a non-accrual basis $1,273,362 $1,157,329
Loans contractually past due ninety days or more
as to principal or interest 8,749 65,977
Loans whose terms have been renegotiated to provide
a reduction or deferral of interest or principal
due to a deterioration in the financial position
of the borrower 114,415 117,424
Loans now current where there are serious doubts as
to the ability of the borrower to comply with
present loan repayment terms - -
--------- ---------
$1,396,526 $1,340,730
========= =========
</TABLE>
The Bank recognized $13,321 and $52,377 in interest income during the
periods ended March 31, 1994 and 1993, relating to the above non-accrual loans.
Had these loans been performing, approximately $47,144 and $28,563 of
additional interest income would have been recognized in the first quarter of
1994 and 1993, respectively.
OTHER INCOME
Other Income for the three months ended March 1994 was $372,732 compared
to $279,041 for the same period of 1993, a $93,691 increase. The majority of
the increase was the result of gains on sales of securities.
16
<PAGE> 98
OPERATING EXPENSE
Other expenses for the three months ended March 1994 increased $108,553
compared to 1993. Salaries and benefit costs increased $57,339 in the first
three months of 1994. The primary factor was the Company's election to pay
cash bonuses to all employees in March, 1994.
Total Other Operating Expenses increased $53,333 in 1994 as compared to
1993. This increase was primarily due to a $91,100 increase in professional
fees as a result of expenses incurred concerning a possible acquisition of the
Company. This was partially offset by a $51,000 decline in the cost of the
deferred compensation program for directors. This plan was changed in June of
1993 from a defined benefit plan to a defined contribution plan.
NET INCOME
Income before taxes decreased $209,787 for the first three months of 1994,
as compared to 1993. The increase was due to the items discussed above. The
total provision for federal income taxes charged against income amounted to
$162,524 and $178,316 for the periods ended March 31, 1994 and 1993,
respectively. The provision represents effective tax rates of 29.0% in 1994
and 23.0% in 1993. The Company's minimum tax credit carryforward was exhausted
in 1993. Net income of $404,313 in 1994 represents a return on total assets of
1.16%, compared with a return of 1.72% in 1993.
ASSET/LIABILITY MANAGEMENT
Optimizing net interest income is the goal of asset and liability
management. Management must limit interest rate risk in the balance sheet to
reduce the impact of sudden changes in market interest rates. Management
utilizes asset liability modeling in order to project the effect of interest
rate changes on net interest income and liquidity under current and expected
economic conditions.
Proper asset and liability management helps to maintain an appropriate
balance between interest sensitive assets and liabilities while assuring
adequate liquidity. The asset/liability management plan attempts to minimize
interest rate risk by matching rate
17
<PAGE> 99
sensitive assets and liabilities. However, interest rate risk cannot be
eliminated, since asset yields and rates on liabilities may change by different
amounts at the same time. The Company's interest sensitivity measurements for
several time intervals at March 31, 1994 are shown below. These figures
represent a point in time and are not necessarily indicative of the position on
other dates.
<TABLE>
<CAPTION>
1-90 Days 1-180 Days 1-365 Days
--------- ---------- ----------
<S> <C> <C> <C>
Cumulative Gap as a % of
Earning Assets (13.38%) (14.51%) (1.84%)
</TABLE>
Meeting customer need for loans and deposit withdrawals at the most
economical cost is the purpose of liquidity management. Sources of liquidity
on the asset side of the balance sheet consist of cash, near-cash items
including deposits with other banks maturing within one year or less, federal
funds sold, and short term securities maturing within one year or less.
Mortgage-backed securities make up a large portion of the investment securities
and their pool maturities are generally greater than 10 years. However, these
securities provide monthly cash flows and a greater return than that available
in other short term securities. These securities assist in maximizing the
earnings from excess funds while at the same time maintaining a strong
liquidity position. It is the belief of management that these securities will
have no adverse effect on the Company's liquidity position.
The Company's core deposits are its most important and stable source of
funds. Average core deposits totaled $109.4 million and $108.2 million for
March 31, 1994 and 1993 respectively.
Average time deposits over $100,000 were $14.7 million at March 31, 1994,
a 5.77% decrease from March 31, 1993.
A secondary source of short-term liquidity for the Company is short-term
borrowings. Federal funds lines of credit are established with several of the
Company's correspondent banks. These lines can be used to meet short term
liquidity needs.
It is the belief of management that liquidity is adequate to meet all of
the funding needs of the Company's customers.
18
<PAGE> 100
INTEREST RATE SENSITIVITY (DOLLARS IN THOUSANDS)
The following table presents the interest sensitivity of the Company at
March 31, 1994. It should be noted that this table presents the Company's
overall position for a single day, which may not be indicative of its position
in the future.
<TABLE>
<CAPTION>
1-90 91-180 181-365 Over
Floating Days Days Days 1 Year Total
-------- ---- ---- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Rate Sensitive Assets:
Investment Securities* $ 0 $ 13,596 $ 6,494 $ 8,852 $35,562 $ 64,504
Short Term Investments 3,850 0 0 0 0 3,850
Loans** 14,504 6,634 6,915 13,586 21,192 62,831
------ ------- ------- ------- ------ ------
Total $ 18,354 $ 20,230 $ 13,409 $ 22,438 $56,754 $131,185
======= ======= ======= ======= ====== =======
Rate Sensitive Liabilities:
Money Market Deposits*** $ 15,064 $ 0 $ 0 $ 0 $ 0 $ 15,064
Time Deposits and Savings*** 0 21,259 14,894 5,813 17,994 59,960
Other Deposits*** 19,816 0 0 0 20,753 40,569
------- ------- ------- ------- ------ -------
Total $ 34,880 $ 21,259 $ 14,894 $ 5,813 $38,747 $115,593
======= ======= ======= ======= ====== =======
Gap $(16,526) $ (1,029) $ (1,485) $ 16,625 $18,007 $ 15,592
Cumulative Gap $(16,526) $(17,555) $(19,040) $ (2,415) $15,592
Cumulative Rate Sensitive
Assets to Rate Sensitive
Liabilities 0.53:1 0.69:1 0.73:1 0.97:1 1.13:1
</TABLE>
*Include estimated mortgage-backed securities prepayments based upon the
previous months actual principal repayments. Using prepayments assumptions,
the estimated average remaining life of the mortgage-backed securities
portfolio at March 31, 1994 was between six and seven years.
**Non accrual loans are excluded.
***The Company's experience has indicated that the repricing of retail NOW and
savings accounts in response to changes in general market rates does not result
in rate changes of the same magnitude. In addition, these deposit categories
have historically been very stable sources of funds for the Company, which
would indicate a much longer implicit maturity than their contractual maturity.
Consequently, retail NOW and savings accounts are included in the "over 1 year"
category.
19
<PAGE> 101
PART II - OTHER INFORMATION
<PAGE> 102
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto authorized.
BNR BANCSHARES, INC.
-------------------------------------
/s/ Frank J. Greely, Jr.
-------------------------------------
Frank J. Greely, Jr.
President and
Chief Executive Officer
Signed as Authorized Officer
of Registrant
/s/ Daniel J. Dietrick
-------------------------------------
Daniel J. Dietrick
Treasurer
Signed as Chief Financial
Officer of Registrant
Date May 13, 1994
----------------------------
21
<PAGE> 103
CURRENT REPORT OF BNR BANCSHARES
INC. ON FORM 8-K DATED
AS OF MARCH 16, 1994.
<PAGE> 104
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 16, 1994
BNR BANCSHARES, INC.
--------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Louisiana 72-0954582
-------------- --------------------- ----------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
107 East Main Street, New Roads, Louisiana 70760
- ------------------------------------------ -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 638-3791
<PAGE> 105
ITEM 5. OTHER EVENTS.
On March 16, 1994, BNR Bancshares, Inc. ("BNR") and First
Alabama Bancshares, Inc. ("First Alabama") entered into a nonbinding letter of
intent (the "Letter") with respect to the proposed merger of BNR into First
Alabama. For information regarding the Letter and the proposed merger, please
refer to the copies of the Letter and the related press release filed as
exhibits hereto and hereby incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS.
The Exhibits listed in the Exhibit Index are filed as part of this
Current Report on Form 8-K.
- 2 -
<PAGE> 106
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BNR BANCSHARES, INC.
(Registrant)
By: /s/ Frank J. Greely, Jr.
------------------------
Frank J. Greely, Jr.
President and Chief Executive Officer
Date: April 6, 1994
- 3 -
<PAGE> 107
EXHIBIT LIST
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE NO.
- ------- ----------
<S> <C>
99(a) Letter of Intent, dated as of March 16, 1994, between BNR Bancshares, Inc. ("BNR") and First
Alabama Bancshares, Inc. ("First Alabama").
99(b) Joint Press release dated March 16, 1994, of BNR and First
Alabama.
</TABLE>
- 4 -
